The Student Loan Act 2023, or the Access to Higher Education Act 2023, is an initiative that will enhance swift access to higher education for the poor.
This initiative will provide access to tertiary education for at least 133 million Nigerians who earn the lowest incomes.
Recipients are expected to commence repayment two years after the completion of their youth service. But the Act states this assuming that every graduate will be gainfully employed immediately after graduation.
However, the latest data on unemployment shows that 33.28 per cent are unemployed, while an additional 22.84 are underemployed by the end of 2020. What, then, will be the fate of the loan recipients who will be unemployed even after two years of youth service?
Section 6 of the act states the function of the Nigerian Education Loan Fund, which is saddled with the responsibility of managing the loan. Sub-sections 6 and 7 indicate that the fund will monitor the recipients’ progress from the award stage to employment.
“Monitor academic records of grantees of the loan to obtain information on their year of graduation, national service, and employment in to ensure that grantees of the loan commence repayment of the loan as at when due.
Liaise with the employers of the grantees and conclude documentation with employers to ensure that the required sum to be deducted is deducted from the grantees salary and remitted to the student loan fund/account as directed by the commission.”
Thus, loan beneficiaries will be on constant monitoring to determine their academic progress and employment status after graduation. It is expected that Section 18 will be implemented on the grantees two years after their youth service.
This will be done by deducting 10 per cent of their earnings at source from those employed. Those who will be self-employed are also expected to remit 10 per cent of their profits to the fund.
Thus, while there is unemployment in the country, others are underemployed. This means they earn far below their required pay according to their qualifications. This could be traced to people working on any available job rather than being unemployed.
For this category, they will remit the required percentage to the fund, even though it will cost them their comfort as they need to earn more in the first place.
Currently, only the government pays minimum wage in the country, meaning that most people earn far below the minimum wage. This leaves the majority of the graduates financially underemployed.
Depending on the amount of loan granted to them, they will spend one-third at the minimum of their working career repaying the loan.
Thus, those employed, even at the level of underemployment, will be able to repay the loan. The duration of repayment does not matter as it will be spread over their career life. An example is the former President of the United States, Barack Obama, who announced that he completed his student loan repayment in 2004 while he was still a Senator.
Those employed (including those underemployed) receiving some income level can repay at a time in their careers. This also applies to those self-employed and making a profit from their businesses.
However, the Act is mute about those who eventually become unemployed even after two years of post-youth service.
Sub-section 6 only stipulates a penalty for those who will be self-employed after their youth service who fail to provide details of their business financial report. It states that “anyone in default of the provision of sub-section 4 above, or found to be aiding the default of sub-section 5, commits an offence and is liable on conviction to a fine of N500,000, or imprisonable for two years term or both.”
The Act remains mute on the fate of those who are unable to secure any form of employment two years after their youth service. Also, the fate of those who peradventure becomes disabled and cannot work after and repay the loan.
As applicable in the United States, beneficiaries are granted loan forgiveness if they become disabled and cannot work. For such persons to be granted pardon, they must apply through the Total and Payment Disability discharge (TPD). The category under this disability is defined as those who are veterans, those receiving other benefits, and those otherwise disabled,
A Legal Practitioner, Basil Hemba, said since the law is silent about that, there are no implications of failure to repay the loan on those who are yet to be employed two years later. He raised concerns about students cashing out on the government by collecting the loan and defaulting. But pointed out that the repayment process, as stipulated in the act, allays any fear of that.
Barr Hemba, however, pointed out that no college graduate intends to stay idle as they will aspire to secure a paid job or business after graduation. He feels this is why the act was silent about the fate of the unemployed, even two years after NYSC.