Need for a student loan policy in Nigeria

(By Olalekan Odewale)

Many would say that in a nation where over 70 per cent of its revenue is expended on recurrent expenditure, such an economy is unlikely to be able to afford financing a long-term investment like a student loan scheme. Nigeria has a lot of funds which are disbursed daily under names that portray economic empowerment and poverty alleviation. These funds in most cases have not justified the various programmes for which they were earmarked

RECENT demonstrations by students of different tertiary educational institutions in Nigeria over the introduction of new school fees regime or the hike in existing fees are an indication of Nigerians willingness to properly educate themselves in the face of ravaging poverty.

   Over the years, the cost of acquiring quality education has risen astronomically. Between 1999 and 2002, most federal universities charged less than N2, 000.00 per session, this amount was exclusive of hostel accommodation which back then was about N200.00 a year.

   Today, the situation has changed; students are faced with the burden of financing their academic desires of becoming university graduates at an exorbitantly high cost.  This trend is global, not peculiar to Nigeria.

   Undertaking a comparison of methods of financing university education globally has brought to light the student loan policies in Europe and the United States.  Student loans are federal and private, made available by the government and other financial institutions operating in their economy. The loans are available to students of tertiary educational institutions to assist them in funding their graduate and post graduate education. The loans are long term with a moratorium period. The moratorium period covers studentship and repayment starts once the beneficiary secures employment. The loan attracts competitive interest rates close to market dictates. The interest rate varies with the level of education of the beneficiary: Interest rates for undergraduate studies are usually below 7 per cent per annum and post-graduate rates not exceeding 9 per cent.

These loans have greatly assisted many citizens in Europe and America within the low and medium class to receive a university education.  A recent survey in America revealed that many members of the American legislature and some executives are currently repaying their loans even long after they left college, sometimes more than a decade ago.

  The increasing poverty level in Nigeria coupled with the insensitive price hike in educational cost has greatly necessitated studies into funding of tertiary education in the country. Incentives need to be offered to students to motivate them to continually pursue their academic quest in the face of rising education cost. The introduction and adoption of a student loan policy for all Nigerian students will greatly enhance the attainment of government objective of education for all especially as is encapsulated in Vision 2020.

   Factors militating against the success of the student loan scheme:

In Nigeria, a lot of factors are militating against the possibility of implementing a successful student loan scheme. One or two of those factors are:

Absence of a comprehensive national database:  Since independence, Nigeria has been unable to effectively put in place an efficient database. This database, should have ordinarily have registered all Nigerians such that it provides adequate information about every Nigerian within seconds.  The government over the years has tried to no avail to have a central data system. In pursuit of the objective came the National ID card scheme introduced by the Obasanjo Administration and the ongoing National Identity Management Scheme (NIMS). If the government is able to put in place a proper database structure which captures all Nigerians along with the Demographic Information as well as Biographic, this will provide the needed information for the take-off of the national student loan scheme.

Funding requirement: Many would say that in a nation where over 70 per cent of its revenue is expended on recurrent expenditure, such an economy is unlikely to be able to afford financing a long-term investment like a student loan scheme. Nigeria has a lot of funds which are disbursed daily under names that portray economic empowerment and poverty alleviation. These funds in most cases have not justified the various programmes for which they were earmarked.

  The sovereign wealth fund is a fund set aside for investment purpose to cater for future development of Nigeria especially when the oil is no longer a booming source of revenue. The fund is today saving for future benefit. Education is an important investment for any nation , no nation can survive without an educated workforce. For a nation to witness economic growth and development, its workforce must be properly equipped educationally to face the challenges of the economic turnaround. The present level of insurgency being witnessed in the North eastern part of the country can be linked to the low educational development of the North.

   An investment  as little as 5 per cent of excess crude oil account and 5 per cent of the Sovereign Wealth Fund can be the start-off point for the establishment of a student loan scheme in this country. This little investment will provide long-term funds that will ensure the availability of funds at a cheaper rate for all students in Nigerian tertiary institutions to access and pay back during their working lives.

   Since the government has started addressing the infrastructure decay in the educational system via the ASUU/FGN agreement on tertiary education funding of 2013, the administration should also consider the plight of students who may be in need of quality education. It would be unwise for a government to spend so much annually in improving the infrastructure in the educational system and the student being unable to appreciate it as a result of their inability to pay the fees as was witnessed in the various demonstrations which occurred particularly in the South-West over school fees adjustment.

Job creation: A major factor that will greatly influence continuity of the scheme is the creation of jobs. Without jobs, repayment of the loans will be impossible. While commending the present administration on its efforts towards job creation, one should also remind it that the jobs being created at the moment do not have provision for skilled labour within the economy. The high number of the unemployed is alarming. The recent job interview catastrophe conducted by the Nigerian Immigration Service is a testimony of the reality of unemployment issues facing the country. Efforts should be made to generate needed employment. The government should concentrate on some sectors of the economy which have the propensity to stimulate economic recovery and job creation. Such sectors include power and agriculture.

   Entrepreneurship-based courses should be introduced in our tertiary institution curriculum. This has the possibility to train the youths to be business owners rather than job seekers.

    The introduction of tuition fees is inevitable due to rising cost of infrastructure maintenance. However, succour can be provided for both parents and students through a fund they can access and repay in future with minimum interest consideration.

   Nigeria’s Educational System is in need of repositioning, which will be expected to re-establish Nigeria as the true giant of Africa. However, this can only be achieved through adequate investment made on both educational infrastructure and the students.

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