Detail Facts About the Student Loans Act 2024 Nigeria

President Bola Tinubu, on Wednesday, April 3, 2024, signed into law the Student Loans (Access to Higher Education) (Repeal and Re-enactment) Bill, 2024. The Act is of historic proportions as it seeks to guarantee sustainable higher education and functional skill development for all Nigerian students and youths.

The newly introduced Access to Higher Education Act, 2024—commonly referred to as the Student Loan Act—builds upon the limitations of its predecessor while introducing more comprehensive support mechanisms. It expands its focus to not only cover tertiary education but also technical and vocational training.

Central to this Act is the establishment of the Nigeria Education Loan Fund. This fund is designed to assist Nigerians in financing their higher education by providing loans that cover tuition, fees, and living expenses. Repayment of these loans is set to commence two years after the completion of the National Youth Service Corps (NYSC) program, allowing graduates a period to stabilize their finances before beginning repayment.

Amendments Under the New Student Loans Act, 2024

The Student Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024 has addressed previous issues and introduced several key amendments:

1. Establishment of NELFUND

The Act establishes the Nigeria Education Loan Fund (NELFUND) as a corporate entity, enabling it to sue and be sued in its name. NELFUND has the authority to acquire, hold, and dispose of both movable and immovable property to fulfill its functions. This empowers the Fund to enter into contracts, including loan agreements, and to take legal action to enforce repayments.

2. Loan Provision for Education

NELFUND is authorized to provide loans to qualified Nigerians for tuition, fees, charges, and living expenses during their studies at approved tertiary and vocational institutions within Nigeria. This aims to build a diverse fund pool to support access to higher education, vocational training, and skill acquisition.

3. Governance and Management Structure

The Act delineates governance and management functions by establishing a board of directors with a chairman and a secretary. The board includes representatives from relevant ministries, regulatory bodies, participating agencies, universities, polytechnics, colleges, student bodies, and the private sector. A management team, led by a managing director and including executive directors, handles daily operations. Appointments to both the Board and Management are made by the President of Nigeria.

4. Funding Structure

The General Reserve Fund is created to finance NELFUND, receiving 1% of all taxes, levies, and duties collected by the Federal Inland Revenue Service (FIRS) for the Federal Government. This fund supports loan disbursements, operational expenses, and other necessary expenditures.

5. Removal of Income and Guarantor Barriers

The new Act eliminates the family income threshold and guarantor requirements. Previously, applicants needed family incomes below N500,000 and at least two guarantors from specific professional categories. These conditions are now removed, broadening access to loans.

6. Inclusion of Skill-Development Programs

The revised Act extends loan eligibility to those pursuing skill-development programs in addition to tertiary education.  In addition to students who have secured admission into tertiary institutions, loans are available to students in vocational schools and and technical training established by the Federal and State Governments. The 2024 Act however restricts the later to vocational schools licensed by the Federal Government.

7. Removal of Parent’s Loan History Requirement

The Act abolishes the requirement related to the applicant’s parent’s loan history, allowing more students to qualify for loans.

8. Repayment Terms

Loan recovery will start two years after the completion of the National Youth Service Corps (NYSC). Beneficiaries may request repayment extensions by providing an affidavit confirming unemployment and lack of income. False statements to NELFUND are considered felonies, punishable by up to three years in prison. The Act also includes provisions for loan forgiveness in cases of death or unavoidable circumstances.

9. Equitable Loan Distribution

The Board is mandated to ensure a fair national distribution of loans approved and disbursed each year. It plans to ensure that all eligible students, regardless of geographic location or institutional affiliation, have fair access to funding. This includes mandates for a minimum national spread of approved loans each financial year, aiming to prevent disparities and promote inclusivity across Nigeria’s diverse educational landscape. By requiring that loans be fairly distributed among various regions and types of institutions, the Act seeks to address historical imbalances and provide equal opportunities for students from underserved areas or institutions, thus fostering a more balanced and accessible higher education system nationwide.

10. Repayment plan 

The Act did not put a cap on the amount students can access or within a period of which they must conclude repayment. It, however, states that the repayment of the loan begins exactly two years after the completion of the participation in the NYSC programme. A beneficiary shall remit 10 per cent of their income to the Fund at the end of every month. For self-employed individuals, 10 per cent of their total monthly profit shall be remitted as part of the repayment plans.

Meanwhile, defaulters risk a N500,000 fine, two years jail term or both when they fail to repay their loans. Furthermore, the 2024 Act also provides that payment deduction should not exceed 10% for those self-employed. 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.

Structure of The Student Loans Act

The Student Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024 is organized into six parts, encompassing 37 sections. Each part is designed to address different aspects of the Nigerian Education Loan Fund (NELFUND) and the administration of student loans. Here is a detailed breakdown of the Act’s structure:

Part I: Establishment and Functions of NELFUND

• Sections 1-8: This part outlines the foundational aspects of NELFUND, including its establishment as a body corporate, its objectives, powers, and functions. It describes the legal status of NELFUND, its mandate to provide educational loans, and the scope of its operational activities. Key provisions include the acquisition, holding, and disposal of property, as well as the Fund’s role in entering contracts and legal proceedings.

Part II: Governance and Management

• Sections 9-16: This section focuses on the governance structure of NELFUND. It details the composition, roles, and responsibilities of the Board of Directors, including the appointment and removal processes, tenure, and duties. It also outlines the roles of the Managing Director, Executive Directors, and other staff members. Provisions cover the operational framework of the Board, including its meetings, decision-making processes, and reporting obligations.

Part III: Financial Provisions

• Sections 17-22: This part addresses the financial framework of NELFUND. It includes provisions for the Fund’s sources of funding, financial management, accounting procedures, and audit requirements. It also mandates the preparation and submission of annual reports. Key financial mechanisms such as the General Reserve Fund, tax allocations, and expenditure guidelines are detailed to ensure transparency and accountability in financial operations.

Part IV: Administration of the Student Loan Scheme

• Sections 23-28: This section covers the administration of the student loan program. It specifies the criteria for applicant eligibility, the process for loan applications, and conditions for disqualification. It also outlines the procedures for the disbursement of funds, including loan amounts for tuition, fees, and living expenses. This part ensures that the loan distribution process is fair, efficient, and accessible to eligible students.

Part V: Protection and Indemnity

• Sections 29-32: This part provides safeguards against adverse claims and liabilities. It includes provisions for indemnification of the Board, management, and staff against legal claims arising from their official duties. It also covers the protection of the Fund’s assets and operations from external challenges and ensures that personnel are shielded from personal liability in the execution of their responsibilities.

Part VI: Miscellaneous Provisions

• Sections 33-37: This final part includes various ancillary provisions necessary for the effective implementation of the Act. It addresses miscellaneous issues such as the procedures for amending the Act, transitional arrangements, and the resolution of disputes. It also includes provisions for penalties related to false statements and fraud, as well as any additional regulatory requirements necessary for the proper functioning of NELFUND.

How to Apply for the Education Loan

The Student Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024 outlines a structured application process for securing education loans. Below are the detailed steps for applying:

1. Submission of Application:

1. • Where to Submit: Applications must be submitted through the applicant’s bank to the Chairperson of the committee, which is headed by the Governor of the Central Bank of Nigeria (CBN).

2. Required Documents:

1. • Cover Letter: A cover letter signed by the head of the applicant’s institution (Vice-Chancellor for university students, Rector for polytechnic students, or Provost for students of colleges of education) and the institution’s Students Affairs Officer.
   • Admission Letter: A copy of the applicant’s admission letter from the approved educational institution.
   • Guarantor Letters: At least two guarantor letters addressed to the Chairperson of the committee. Each letter must be accompanied by two passport photographs of the guarantors.
   • Evidence of Employment: For employed guarantors, proof of employment is required.
   • Self-Employed Guarantors: For self-employed guarantors, the following documents are required:
     • Business Registration: Proof of business registration with the Corporate Affairs Commission (CAC) or other relevant authorities.
     • Bank Statements: Recent bank statements from the guarantor’s banker.

3. Application Processing:

1. • Communication: The committee will communicate the status of the application to the applicant within 14 days of receipt.
   • Disbursement: Loan disbursement is contingent on the availability of funds. The actual disbursement will occur only when the necessary funds are available.

By following these guidelines, applicants can ensure that their applications are complete and meet the required criteria for consideration by the committee.