Nigeria's foray into student loans is not a new endeavour. In the bygone era of the 1970s and 1980s, the nation embarked on a similar path, seeking to provide financial assistance to tertiary institution students through loans.
The economic stability of the 1970s, characterised by oil booms and relative prosperity, provided a backdrop that facilitated the initial student loan program.
However, those earlier attempts encountered challenges that hindered their success. The challenges included later economic downturns and financial instability that weakened the foundations of that earlier initiative.
By learning from past experiences, the government can implement safeguards to ensure the current student loan program's success.
The new loan law
The Nigerian Student Loan Act or SLA, sponsored by the immediate past speaker of the House of Representatives, Femi Gbajabiamila, was passed into law on June 12, 2023, following its signing by President Bola Tinubu. The bill established a Students Loan Fund or SLF to provide interest-free loans to Nigerians seeking higher education.
The loans will be available to students who cannot afford to pay for their education, payable after the students graduate and gain employment.
The SLB is a significant piece of legislation that has the potential to improve access to higher education in Nigeria. It is also an experiment that will be closely monitored by policymakers and stakeholders in the education sector.
What is ASUU saying?
However, the Academic Staff Union of Universities or ASUU views the student loan bill through a different lens. The union accuses the government of using it as a pretext to gradually withdraw its financial support for public universities by shifting the burden of funding to individual students.
ASUU's concern circles around the government's commitment to adequately fund public universities, citing the long-standing issues of infrastructure decay, inadequate staffing, and poor remuneration for academics.
1972 versus 2023: An economic perspective
Between 1973 and 1991, Nigeria provided loans totalling 46 million naira to students. As time went on, the cracks in the foundation began to show.
The country's economic state took unexpected turns, and the sustainability of the student loan program came into question. What seemed like an unshakable dream started to fade as some graduates could find jobs to enable them to repay the loans, forcing the government to end the programme.
This was despite the fact that in the 1970s, Nigeria had a relatively low unemployment rate of 4.4%. With the unemployment rate now at 33.3% and expected to shoot even higher in the years coming, the chances of graduates finding jobs to repay the loans become even slimmer.
But that is even a secondary concern. The primary concern is whether, amid a near unbearable national depth, the government has the money to hand out to over 1.8 million students across Nigerian universities, polytechnics and colleges of education every year.
Furthermore, access to higher education has never been a major challenge in Nigeria. With an estimated 1.8 million graduates from tertiary institutions entering the labour market every year in Nigeria, in relative terms, inaccessibility to higher education due to financial constraints is not a significant problem in Nigeria.
And suppose the government can provide all the loans; will it also offer more job opportunities when it's time for repayment?
Education no longer assures a secure means of livelihood and future in Nigeria. This is because the pool of graduates waiting to be gainfully employed is growing in a geometric progression while job growth isn't. This means Nigeria has more qualified and skilled graduates chasing fewer jobs.
Global audit and tax advisory firm KPMG, projects that Nigeria's unemployment rate will hit 40.6% by the end of 2023, indicating that the government needs to focus on policies to create employment and, by extension, increase the nation's GDP.
Seun Akinola, an economist, concluded that "the student loan bill is a good idea, but it is not what we need as a nation. We need bills and policies that will help reduce the alarming rate of unemployment in Nigeria."
He added: "Education undoubtedly provides a platform for cognitive skills and positive values essential for state and national development. The skills may be wasted when there's no platform for its exhibition - the platform can come in the form of job creation."
As the echoes of the past merge with the present realities, Nigeria's economic state in 2023 stands as a foundation built upon lessons.
How well the new student loan policy will be effectively implemented remains to be seen.