PITFALLS OF THE STUDENTS’ LOAN FUND

 The loan scheme is not sustainable, argues Chekwube Nzomiwu

Basking on the euphoria of his inauguration as the President of Nigeria, Bola Ahmed Tinubu signed into law the Students Loan Bill, in fulfillment of his campaign promise to improve access to tertiary education in Nigeria. According to the President’s spokesman, Dele Alake, the law will enable Nigerian students to access loans at interest-free rates. While assuring that it will boost the educational pursuit of the youths across the country, Alake made it clear however, that students must show evidence of being indigent to enjoy the facility from the Nigerian Education Bank/Fund.

In a swift reaction, both the Academic Staff Union of Universities (ASUU) and the Academic Staff Union of Polytechnics (ASUP) faulted the law, establishing the students’ loan fund. According to the President of ASUU, Prof. Emmanuel Osodeke, the bill discriminates between the rich and poor.  Osodeke further argued that it would end up encumbering the children of the poor with debt after graduation.

Similarly, the President of ASUP, Anderson Ezeibe described the law as impracticable, whichever way one may look at it. Ezeibe wondered what will happen to someone who is not working after the National Youth Service Corps (NYSC), but is expected to repay the loan two years after serving his country.  

For now, I have not seen any satisfactory response to the concerns expressed by stakeholders about the proposed education loan. The claim by the Federal Ministry of Education that the federal government cannot foot universities bill any longer is a cliché that may not serve any useful purpose in the ongoing debate over the education loan.  If the federal government invested 19 billion dollars in refineries for eight years and yet, not even a litre of fuel was produced, footing the bills of the universities will not be a very difficult task for them.

The truth is that education in Nigeria suffers, not because the funding for it is not available, but owing to the limited outlook of the policymakers who see investment in education only from the narrow prism of social investment. The perception is different in other climes where policymakers see education as an industry with boundless opportunities. Just like every other industry, what you invest in education is what you get back.

Hence, what education in Nigeria needs today is increased funding. Former freedom fighter and first post-apartheid President of South Africa, Nelson Mandela (of blessed memory), once described education as the most powerful weapon which you can use to change the world.  As populist as it may look, introducing education loan is a tangential measure. It does not make any sense for the Nigerian government to give students loan to finance their studies in tertiary institutions that are bogged down by incessant industrial unrest, dilapidated infrastructure, lack of basic amenities and poor learning environment.  

The revitalization of the universities formed part of the series of unimplemented agreements that the federal government signed with ASUU. I expect the Tinubu administration to intensify efforts in this direction, as it will ensure a comprehensive improvement of the quality of learning in Nigerian universities. Same should apply to the polytechnics and colleges of education.

In the past, Nigerian universities and polytechnics attracted foreign students. Today it is the opposite. Nigerians, who have the means, migrate in their thousands to seek quality education outside the shores of the country, travelling as far as the United Kingdom and other countries of Europe, Asia and North America. Sister African countries, such as South Africa, Ghana, Egypt and even war-torn Sudan have become attractive to Nigerian students. In April this year, the federal government spent 1.2 million dollars to hire buses to evacuate Nigerian students from Sudan. Last year approximately 1,200 Nigerian students were evacuated from Ukraine, following the Russian invasion.             

Unless we learn from history, we are bound to repeat it. The recent effort on students’ loan is not the first in the history of Nigeria. The first was the Nigerian Students Loan Board established in 1972. For the 18 years the board lasted, the federal government gave loans totaling about N46 million to students to finance undergraduate and postgraduate studies. The board encountered severe problems, including abysmally poor loan repayment, forcing the federal government to scrap it in 1991.

The latest bill to establish the loan fund was initiated by former Speaker of House of Representatives, Femi Gbajabiamila who is currently the Chief of Staff to the President. It was titled ‘Students Loans (Access to Higher Education) Act, 2023.” The funding will be drawn from one percent of all profits accruing to the federal government from oil and other minerals; taxes, levies and duties accruing to the federal government from the Federal Inland Revenue Service (FIRS), Nigerian Immigration Service, as well as education bonds, education endowment funds schemes, donations, gifts, grants and revenue accruing to the fund from any other source.”

As lofty as the idea is, I agree with the ASUU, ASUP and others who foresee likely pitfalls in the new education fund. The problem with our policymakers is that they neither have foresight nor make use of hindsight. With the benefit of hindsight, the proponents of the students’ loan bill should have foreseen the likelihood of poor loan recovery, sinking the new fund, like its precursor, the Students Loan Board.

The defunct board came into being in 1972 during the era of the oil boom under Gen. Yakubu Gowon administration when Nigeria had so much money but didn’t know what to do with it. At the time the federal government scrapped the board in 1991, the exchange rate of naira to the dollar was N10 to one dollar. Today, the exchange rate is in the neighbourhood of N700 to one dollar.

In 1970s and 80s, graduate unemployment was almost non-existent in Nigeria. People got jobs as soon as they graduate from tertiary institutions. In 1991, unemployment in Nigeria was estimated at 3.2 percent. Today, unemployment is about 33 percent, according to the last unemployment statistics released by National Bureau of Statistics (NBS) in 2021. KPMG, a multinational professional services network, and one of the big four accounting organisations registered in the United Kingdom, stated recently that unemployment in Nigeria has increased to 37.7 percent and predicted that it will hit 40 percent this year.

Considering the prevailing economic indices, the new education fund or bank or whatever it is called, is clearly not sustainable. It is an exercise in futility in an economy in which almost half of the labour force is unemployed and more than half of those working, underemployed.

I therefore agree with ASUU and ASUP that the education loan will mortgage the future of the younger generation, especially those whose parents are not wealthy. With far better economic indices than Nigeria today, the United States of America is facing very serious student loan recovery crisis. According to statistics of the Education Data Initiative, it takes the average borrower 20 years to pay back their student loans. Remember that the more you owe, the longer it will take to pay off.

Any moment from now, the US Supreme Court will rule on the student loan debt relief action, designed by the Biden administration to redress severe economic hardship of millions of student loan borrowers caused by the COVID-19 pandemic. About 26 million loan borrowers in the US are eligible to benefit from the action which represents the single largest, most comprehensive loan forgiveness initiative in the nation’s history. Seventeen states in the United States are challenging the action at the Supreme Court.

While defaulters in the US are hoping for a favourable ruling by the Supreme Court, their counterparts in Ghana were named and shamed in newspaper publications on May 17 and 22, 2023.  The disgraced defaulters accessed the loans from the Ghana Students Loan Trust Fund. The Ghanaian adopted a punitive approach because the students’ loan debt was becoming a huge burden on the government. Many students default because they do not see it as a criminal offence. I doubt if the Nigerian students will think different with their “aluta spirit” and sense of entitlement.   

Presently, Nigeria is already trapped in debt. Unless the education loan scheme is targeted at “creating jobs for the boys,” I do not see the reason why anybody should tinker with such an idea at a time that the country groans under heavy debt burden. The argument as to whether our problem is debt or revenue is just a matter of semantics.

In conclusion, I am of the opinion that the federal government should rescind the idea to commence the loan disbursement in September. The President and his team should first of all work in collaboration with all stakeholders in the education sector, including education policy experts and the academia to address holistically all the challenges bedeviling the education sector in Nigeria. Introducing or increasing tuition for tertiary education is not the solution. Rather, it will further impede access to tertiary education, which the education loan scheme wants to improve.

Nzomiwu, a public affairs commentator, writes from Awka, Anambra State