‘Interest-free student loans would improve access to tertiary education’

A bill seeking to make the Federal Government provide loans to enable students pursue tertiary education scaled through second reading on the floor of the House of Representatives, recently.  The bill among other things proposed the establishment of Nigerian Education Bank and interest-free loans to students.

A students’ loan scheme may empower financially disadvantaged students, narrow the widening skills gap and check rising social inequality, stakeholders say.

According to Femi Gbajabiamila, sponsor of the bill and member of the House of Representatives, the loans should be interest-free because ‘Nigeria is blessed with abundant natural resources to tap from and encourage quality education for future generations’. In his remark Yakubu Dogara, speaker of the House of Representatives commended members for their contributions and referred the bill to the Committee on Tertiary Education and Services for further legislative actions.

“My parents value education. However they are not able to afford it given their meagre income. My father is a factory work, a welder, and my mother is a petty trader. I barely made it through my National Diploma (ND), selling odds and ends to pay my school fees. I just arrived here in Ajegunle, Lagos to hustle and save some money for my Higher National Diploma (HND), recounted 20 year old, bar attendant, Isioma Izuegbu.

Izuegbu further said, “It is challenging to put money aside for my HND, because I am the first born and need to take care of my younger siblings. I do my best to wear a smile and please customers, but my situation is pathetic. My parents’ resources are slim, we scarcely eat nutritious meals.”

Unlike Nigeria, Ghana has Students Loan Trust Fund (SLTF), which lends to students at rates below those offered by commercial banks.

Georgina Tindan, a Computer Science student at the Kwame Nkrumah University of Science and Technology, Ghana, said,  “I am a proud beneficiary of the Students Loan Trust Fund. It provided me the opportunity to be more conscious and responsible for my studies rather than go to and fro in search of money to cater for my expenses”.

Tindan pointed out that the loan reduced the financial burden on her parents as she used most of it to purchase books, food and even pay accommodation fees.

“Besides all these numerous benefits, SLTF loan offered a greater flexibility, and more manageable terms and conditions than other standard non-education loans from the commercial banks” she said.

Peter Okebukola, Chairman Crawford University Governing Board and former Executive Secretary of the National Universities Commission (NUC) opined that the scheme existed in the past in Nigeria and had to be wound up since repayment rate was pitifully low. “Beneficiaries evaded re-payment claiming it is part of their share of the national cake! I am not sure that this posture among our students has changed. Besides, in the absence of a reliable national ID scheme, tracing beneficiaries will be a hassle. Even now, this phenomenon plays out in the high volume of bad loans that our banks incur”.

Francis Anyim, a lecturer at the department of Finance, University of Lagos contended students’ loan is a noble concept, but wondered how it will be made to work. “Check the records and you will be astounded at the default and abysmal repayment rates of the National Directorate of Employment (NDE) and the Small Medium Enterprise Development Agency of Nigeria (SMEDAN) loans, designed to create and grow businesses” he suggested.

“Besides, the means of repaying the students’ loan is contingent on getting a job after school. The prospects do not look good. Nigeria is a tough terrain” he contended.

Students’ loan scheme may offer opportunity to increase access to higher education institutions and grow human capital capabilities analysts, say. Some experts say a broader conceptualisation is needed to include a social security system.

STEPHEN ONYEKWELU