The Student Loan (Access to Higher Education) Act, 2024

Prior to 2023 the defunct Nigeria Education Bank Act, 1993 was in place regarding helping student with educational loans. The new government passed the now repealed Student Loan Act, 2023, which had some challenges bordering on governance and management, purpose of the loans, eligibility criteria for applicants, method of application, repayment provisions, and recovery of the loans after it had been in the working as a bill since 2016. The repealed Act sought to provide easy access to higher education for Nigerians through interest-free loans from the Nigerian Education Bank. 

In April 2024, the Student Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024 which was an executive bill was signed. The Act sought to guarantee sustainable higher education and functional skill development for all Nigerian students and youths. The Act sufficiently resolved the challenges encountered under the 2023 repealed Act. 

STRUCTURE OF THE ACT

The Act is structured into six parts – Parts I to VI and divided into 37 sections. 

Part I – provides for the establishment, objectives, powers, functions etc. of the Nigerian Education Loan Fund. 

Part II – deals with the board of directors, management and administration. The sections elaborate on the responsibilities, composition, appointment, removal and tenure of the board of directors, the Managing Director, Executive Directors and Staff of the Fund. 

Part III – states the financial provisions- funding, finance, accounts, audit, annual reports etc. 

Part IV – deals with the administration of the Students Higher Education Loan Scheme, eligibility of applicants, disqualification and how the funds are to be disbursed. 

Part V – deals with protection against adverse claims, indemnity etc. 

Part VI – makes miscellaneous provisions. 

NOTABLE PROVISION INTRODUCED BY THE NEW ACT 

1. ESTABLISHMENT OF NELFUND 

The Act stipulates the establishment of the Nigeria Education Loan Fund (NELFUND) as a corporate body that can sue and be sued in its name and has the power to acquire, hold, and dispose of movable and immovable property for the purpose of its functions. 

Separates the governance functions from the management operations of NELFUND by establishing a board of directors with a chairman and a secretary.

The board’s members are drawn from relevant ministries, regulatory bodies, and participating agencies, including the Federal Ministries of Finance and Education, the FIRS, NIMC, NUC, NBTE, and NCCE, as well as representatives of universities, polytechnics, colleges of education, students of tertiary institutions, and the organized private sector.

Establishes a management team led by a managing director, including executive directors responsible for the day-to-day management and operations of the Fund.

The President of the Federal Republic of Nigeria appoints the Board and Management.

2. NELFUND TO PROVIDE LOANS TO QUALIFIED NIGERIANS FOR TUITION, FEES, CHARGES, AND UPKEEP 

The fund is designed to offer loans to eligible Nigerians, covering tuition, fees, charges, and living expenses for their education in recognized higher education and vocational training institutions within Nigeria. 

3. SET UP STRUCTURE FOR FUNDING NELFUND 

The Act also stipulates the process and structure through which NELFUND will be funded. According to the 2024 Student Loan Act, the student loan program will be financed by allocating 1% of all taxes, levies, and duties that the Federal Inland Revenue Service (FIRS) collects and that go to the Federal Government, directing these funds to a General Reserve Fund. 

4. REMOVAL OF FAMILY INCOME BARRIER 

Prior to the enactment of the 2024 Student Loan Act, the family income of an applicant was a determining factor for loan approval. The applicant’s family income must not exceed N500,000 per annum. Under the revised law, however, this requirement has been removed, and family income will no longer be a prerequisite for eligibility for the student loan.  

5. REMOVAL OF GUARANTOR BARRIER 

The 2023 Student Loan Act stipulated that an applicant must provide a minimum of two guarantors. The guarantors must fall into one of the following categories: (i) Civil servants of at least level 12 in the service, (ii) Lawyers with a minimum of 10 years of post-call experience, (iii) Judicial officers, or (iv) Justices of the peace. The 2024 legislation has no such requirement.  

6. LOAN TO INCLUDE SKILL-DEVELOPMENT PROGRAMS 

Application under the 2024 Student Loan Act, is not restricted to students in tertiary institutions alone, but also those seeking skill-development programs. The Act is inclusive to those who want to learn vocational or technical skill in a government-owned institution, but do not have the resources to do so.

7. REMOVAL OF PARENTS’ LOAN HISTORY AS A PREREQUISITE 

The Act stipulates the removal of parent’s loan history as a prerequisite for securing the loan for eligible candidates. 

8. BENEFICIARIES TO BEGIN REPAYMENT 2 YEARS AFTER NYSC 

The recovery process from beneficiaries of the loan scheme would commence two years after the National Youth Service Scheme (NYSC). 

A beneficiary may request an extension of enforcement action by the Fund by providing a sworn affidavit indicating that he/she is not employed in any capacity and is not receiving any income.

9. PUNISHMENT FOR FILING FALSE STATEMENT TO NELFUND 

The 2024 Student Loan Act stipulates punishment for those who provide false Statement to the Fund. Such person under this section would be guilty of a felony and liable to imprisonment for three years. 

10. DEBT FORGIVENESS 

The Act offers a Debt Forgiveness clause in the event of death or acts of God causing inability to repay. 

DIFFERENCES BETWEEN THE REPEALED 2023 ACT AND THE 2024 ACT 

1. The Education Loan Fund 

The Fund is now set up as a body corporate capable of suing and being sued. The objectives of the Fund are more clearly outlined and streamlined in the 2024 Act. These include elaborate provisions allowing for financial investments as part of building, operating and maintaining a diversified pool of funds to support student loans. Some functions or powers in the 2023 Act that are not contained in the 2024 Act include powers of the fund to engage in banking business, monitor academic records 4 of loan beneficiaries and provide financial advice to academic institutions, parents and educational investors. 

2. Loan Cover 

The purpose for the loan in the 2023 Act was only for tuition fees, while the 2024 Act covers tuition and other fees payable to the school as well as maintenance allowances payable to the student. 

3. Income Threshold in Eligibility Criteria 

The 2023 Act sets a threshold of an annual income of less than N500,000 for the applicant or their family, thereby basing eligibility for the loan on financial need. The 2024 Act seems to be open to anyone, not just indigent students. It also dispenses with the two loan guarantors required in the 2023 Act. 

4. Sources of the Fund 

The 2024 Act establishes what it calls the General Reserve Fund, while the 2023 Act merely outlines sources of the Education Loan Fund (same objective). The 2024 Act includes National Assembly appropriation as a funding source, which the 2023 Act does not. The 2024 Act also lists investment incomes, charges and fees by the Fund and repayment of interest on loans as other funding sources. It further deletes the requirement in the current Act for the loan to receive 1% of taxes, levies and dues accruing to both the Nigeria Immigration and Customs Services. 

5. Interest on Loans 

The 2024 Act lists payment of interest on loans granted as a funding source for the Education Loan Fund and mentions repayment of loans and “all charges” in Section 28(3) dealing with repayment. This implies that the loans will not be interest-free. Meanwhile, Section 13(a) of the current 2023 Act says that the loans are interest fees. 

6. Schools Covered 

In addition to students who have secured admission into tertiary institutions, loans are available to students in vocational schools established by the Federal and State Governments. The 2024 Act, however, restricts the later to vocational schools licensed by the Federal Government. 

7. National Spread and Inclusion 

The 2024 Act mandates the Board to ensure national spread of loans approved and disbursed in each financial year. The 2023 Act on the other hand, has a non-discrimination provision that provides for equal access to the fund irrespective of gender, religion, tribe, position or disability status. 

8. Repayment 

The 2024 Act allows the board to make exemptions for loan repayments, that is, in cases of death of the beneficiary, in cases of hardship, for reasons of equity, where it is impossible to recover the loan or where the cost of recovery exceeds the amount being sought. This is commendable but could give way to abuse if not properly managed or if there are no established criteria for hardship or equity. 

9. Disqualifications 

The 2023 Act disqualifies any applicant whose parent had previously defaulted on any loan. The 2024 Act removes this provision but then disqualifies beneficiaries of any loan or other scholarship scheme from the Federal Government or any of its agencies. 

10. The Administrative Model 

The 2023 Act domiciled the fund in the Central Bank of Nigeria to be managed and administered through a Special Committee (headed by the CBN Governor) and the money deposit banks, while the 2024 Act creates a Board of Directors headed by a non-executive chairman and a management team headed by a Managing Director to be assisted by three Executive Directors. The directors have 5-year tenures and are to be responsible for the execution of policy and the day-to-day administration of the Fund. 

11. Self-Employed Persons 

The 2023 Act explicitly recognizes the self-employed category and makes provisions for self-employed persons to submit their business details—address, registration documents, names of partners, directors and bankers—within 60 days of assuming that status. 

12. Method of Application 

A process is clearly stated in the 2023 Act for applicants to submit through their bank a cover letter signed by the vice-chancellor, rector or head of the institution and the dean of students’ affairs, accompanied by the admission letter, two guarantors and their business details if they are self-employed, recommending the applicant for the student loan and accepting liability. The 2023 Act also gives specifications for who can be a guarantor. The 2024 Act seems to allow for flexibility by stating that applications shall be made in the form and manner prescribed by guidelines to be issued by the Board from time to time. Additionally, the Board shall have the power to make specific regulations regarding the method and process of loan applications and the criteria for granting loans in each financial year. 

13. Duty of Employers 

As part of the repayment plan in the 2023 Act, an employer is mandated to deduct 10% of the beneficiary’s salary at source and credit to the Fund, and for those self-employed, 10% of their total profit monthly. Whereas the 2024 Act provides that such deduction should not exceed 10%, i.e., it can be less than. The Act states that any employer that is informed that their employee is a beneficiary of student loans from the Fund who has not completed repayment shall provide such information as the Fund may require to initiate collection of the loan and any charges from the beneficiary. It further imposes on prospective employers the duty to find out from the Fund the student loan status of persons they employ and imposes a fine of not less than N2,000,000 and/or imprisonment term of not less than one year for employers found guilty of contravening this requirement. 

CONCLUSION 

These changes under the Student Loans (Access to Higher Education) (Repeal and Re-Enactment) Act 2024 signify a monumental shift towards democratizing access to higher education in Nigeria. It represents a significant step towards promoting access to higher education and fostering economic mobility, as well as empowering individuals to pursue their educational aspirations without undue financial burden. Its implementation has the potential to yield far-reaching benefits for individuals, communities, and the nation, contributing to a more inclusive and prosperous society.

We hope that these reforms’ have a positive impact on the educational landscape, unlocking new opportunities for countless people as well as overhauling the public tertiary education sector.  

REFERENCES 

1. Students Loans (Access to Higher Education) (Repeal and Re-Enactment) Bill, 2024.

2. Students Loan Access to Higher Education Act 2023

3. PLAC Bill Analysis on Students Loans (Access to Higher Education) (Repeal and Re-Enactment) Bill, 2024.

4. Government Press release by Chief Ajuri Ngelale, Special Adviser to the President (Media & Publicity).