• Sunday, December 10, 2023
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Student loan: The launch of growling nightmares

Nigerian governments have a peculiar fondness for traditional ways of governing and enacting of policies. Despite having connections with economically advanced and technologically superior nations, Nigeria seems to gravitate towards regression, which is truly disheartening.

There is an ongoing contemplation about whether India will become the next China. As of June 1, 2023, it has already claimed the title of the most populous country. Experts are now emphasizing that India is likely to become the next China due to its remarkable infrastructure innovations and technological advancements. The progress is rapid. Nigeria has not reached the helms of its innovations but Nigerians are contributing to its growth. Amazing!

Economically poor, governance unfair and management haphazard; Nigeria in terms of Gross National Income still falls far behind South Africa, let alone surpassing its technological advancements and innovations. Will it now be levelled with India which is superior to it by 13 years?

From ages, Nigeria’s issues are leaders who would not learn the profitable ways to revitalize the country, but continues to enact policies that will take the country backward and which are policies they have limited knowledge about

One such policy is the Students Loan Act. And while it’s not fair to say that President Bola Tinubu, who signed the interest-free education loan into law for Nigerians seeking tertiary education, did a bad job, it is evident that the Act was not thoroughly evaluated with respect to the country’s current state.

Although the scheme may have good intentions, there are flawed clauses in the Act that will render the scheme ineffective.

Upon examining the history of student loans in various countries, it is clear that it is not a bad idea. In fact, such a scheme is beneficial for financially challenged students with a desire to pursue education. However, in Nigeria, the Act fails to address the needs of financially disadvantaged students.

Instead, it appears to indirectly the opposite. This is evident in Sections 14, 16, 23, and subsequent sections of the Act, which outline the eligibility criteria and application procedures for the loan selection committees.

According to the Act, “Students must also provide at least two guarantors, each of whom must either be a civil servant of at least level 12, a lawyer with at least 10 years post-call experience, or a judicial officer, or a justice of peace.”

This initial requirement poses a significant obstacle to the success of the scheme upon its launch in November. In reality, there is a 90% chance that students in need of this loan will not have access to civil servants or lawyers who would be willing to vouch for them without any personal gain.

Finding suitable guarantors will be a nightmare, especially for students from marginalized communities in Nigeria, where they may be the only ones to have gained admission to universities, while others have been limited to colleges of education or farming. How can they find guarantors when their parents are absent or disconnected from any potential guarantor? It is not always feasible for everyone to rely solely on divine providence.

Additionally, the Act states that students must apply for the loan through banks, which will then forward the applications to the 11-person committee at the Central Bank of Nigeria responsible for overseeing the loan. This requirement appears irrelevant and outdated in an era of advanced technology. Why should the loan application process be lengthy and strenuous when it can be done online? Online banks already offer loans exceeding N300,000, so it should be well within the Federal Government’s capacity to create an online portal for the same purpose.

If the Nigerian government aims to emulate successful student loan schemes from countries like Australia, they must adopt a more inclusive approach. Australia’s Higher Education Loan Program (HELP) offers student loans without the need for guarantors and facilitates easy online applications via MyGov or educational institutions.

Read also: Why student loan is a disservice to Nigerians

Repayments in Australia are income-contingent, and there is no means testing (income information) for eligibility. The loan can cover various education-related expenses, and students repay it through the tax system once their income reaches a certain threshold.

By adopting a similar approach, Nigeria’s student loan scheme can become more accessible and fair to all students. This will not only benefit students but also increase the number of taxpayers, contributing positively to the nation’s economy.

Resignedly, to ensure the success of the student loan scheme in Nigeria, it is crucial to remove the faulty clauses that create barriers for financially-challenged students. Instead, the government should look to successful models like Australia’s HELP and embrace digital solutions to make education loans accessible to all deserving students, without a stylish and indirect discrimination. Without this, the student loan is just a launch of growling nightmares that will haunt students before they lay their hands on it. It may destroy them and it may not.

Oyedibu is the founder/editor-in-chief of PIJAlance Magazine.