Study in Ogun Schools, Nigeria

First Student Loan Scheme Bill Passes Second Reading

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House of RepresentativesA bill to create a student loan scheme – called a Higher Education Bank – has passed a second reading in the national assembly and is expected to be approved soon. As expected, there was jubilation among students over the scheme, which is unprecedented in Nigerian higher education.

Student beneficiaries would receive sufficient funding to pay for their higher education and would begin repayment two years after finishing their studies. However, some lecturers called for caution regarding the loan scheme’s implementation.

United States-trained lawyer Femi Gbajabiamila, a member of the House of Representatives, quietly proposed the bill titled “Higher Education Bank”. Many of his colleagues were sceptical about its effectiveness, but a few parliamentarians saw the bill’s wisdom and Gbajabiamila finally convinced most of his colleagues to support it.

The bill survived a first reading, and it was the successful passage of the second reading that propelled parliamentary journalists to accord the bill maximum publicity. It instantly became very big news on campuses across Nigeria.

Segun Olugbile, in a feature in the influential tabloid The Punch, described highlights of the bill. Its primary purpose, he wrote, was to grant interest-free loans to poor students seeking access to higher education and the ability to study without financial stress.

To qualify for a loan, a student must come from a home with an annual income of less than US$3,165 a year. He or she must also have secured admission to any university, polytechnic, college of education or vocational institution established by the federal or a state government.

Reimbursement of loans will begin two years after students have completed compulsory National Youth Service Corps service.

Repayment will be in instalments in the form of direct deductions of 10% of an employed student’s salary at source, deducted by the employer and credited to the student’s loan in the education bank.

For self-employed graduates, a clause in the bill makes it mandatory for beneficiaries to remit 10% of their “total monthly profit” to the bank.

The bill warns that defaulting loan beneficiaries will be prosecuted, and if found guilty will face prison sentences of up to two years or a fine of US$3,165, to be paid in local currency.

The bill advocates several sources of funding for the Higher Education Bank such as “interest arising from deposits in the bank, education bonds, an education endowment fund and 1% of all taxes, levies and duties accruing to the government of the federation from the Inland Revenue Service, Nigerian Immigration Service and Nigerian Customs Service”.

The bill further states that funding will “also include 1% of all profits accruing to the government of the federation arising from oil and other minerals and all sums accruing to the fund by way of donations, gifts, grants, endowment or otherwise”.

It is interesting to note that this bill did not encounter any serious obstacles during the first and second readings, and it is not difficult to see why.

Since the advent of multiparty democracy in Nigeria 14 years ago, there has been an increasing presence of university graduates in the federal and state parliaments. As students, most of them had faced financial hardship.

Also, many MPs have had opportunities to visit the Asian Tigers, especially South Korea where, over the years, the central government allocated a very high percentage of the national budget to education and skills acquisition. For many of these legislators, the success of South Korea – which was less developed than Nigeria in the 1960s – is a source of inspiration.

Almost all students welcomed the bill, which they described as long overdue. “We are happy with this generation of lawmakers who were once university students, both here in Nigeria and abroad. They realise the importance of education,” declared Marimatu Johnson, a spokesperson for the National Association of Nigerian Students.

Lecturers also praised the legislators for supporting the bill, arguing that Nigeria, the sixth biggest crude oil producing nation in the world, had the resources to fund the project.

Dr Henry Hunjo, a lecturer at Lagos State University, was worried about the bill’s repayment clause. “It is often not easy nowadays for graduates to get employed after their compulsory national service,” he told University World News.

“It is therefore necessary for government to create an enabling environment for jobs to be created so that these graduates can repay the loans. The bill should be amended to take care of those who cannot get immediately employed, so as to avoid the stipulated sanctions.”

There is concern that the scheme’s transparent implementation could encounter human-made obstacles. Academics have urged the government to impose zero tolerance for corruption when it comes to implementing the new student loan scheme


Source: University World News

June 2, 2013 |

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