The Student Loan Act, aimed at improving access to higher education, was signed into law by Nigeria’s President, His Excellency Bola Ahmed Tinubu, on April 3, 2024. This act gave rise to the Nigerian Education Loan Fund (NELFUND), a financial initiative designed to provide assistance to undergraduate students pursuing tertiary education in approved institutions. The primary objective of the loan is to help qualified students cover tuition fees, charges, and living expenses during their studies.
Eligibility for the loan extends to students enrolled in government-approved tertiary institutions, including federal and state universities, polytechnics, and colleges. The initiative particularly favors students from low-income backgrounds, offering up to 500,000 Naira annually. Loan repayment begins once the beneficiary graduates and secures employment.
The student loan has become a pivotal source of funding for tertiary education, enabling increased access to higher institutions. By providing financial support, it has the potential to significantly reduce dropout rates and indirectly curb crime, as more students can focus on their education and future rather than engaging in disruptive activities. Additionally, the initiative addresses funding barriers, fostering socio-economic diversity within higher education institutions.
Higher education is widely associated with improved earning potential and better job opportunities. By increasing access to education, the loan contributes to a society with more skilled and educated individuals, promoting overall national development. Moreover, this initiative alleviates the financial strain on working-class students, allowing them to dedicate their time and energy fully to academics rather than juggling multiple responsibilities to pay fees.
However, while the student loan provides a solution to financial challenges, it is not without drawbacks. The risk of accumulating debt before securing stable employment is a significant concern. Graduates face uncertainty regarding job prospects and income stability, which could lead to prolonged repayment periods and financial strain. This burden might hinder entrepreneurial ventures or personal financial growth, as repayments could take precedence over investments or savings.
Another critical issue is that the loan is not interest-free; delays in repayment lead to accumulating interest, compounding the financial burden. Non-repayment may also result in severe consequences, including legal actions, further complicating the borrower’s financial situation.
To maximize the benefits of this initiative and mitigate its risks, prospective applicants should carefully consider certain factors before taking the loan. Firstly, it is essential to evaluate future earning potential and current financial status. Secondly, alternative funding options such as scholarships, grants, or part-time jobs should be explored. Lastly, students should thoroughly analyze the implications of the loan.
In conclusion, after reviewing the pros and cons of the student loan, the benefits appear to outweigh the drawbacks. However, every student applying for the loan must consider one key point: “If the reward is greater than the risk, then take it. Otherwise, it is not worth it.” By making informed decisions, students can find the balance between the benefits and drawbacks, ultimately carving out a promising future for themselves.
Opinion Article by Tersoo John Steven
Edited by Isama Anyaole Peace
I’ve not received my own student loan yet
This is an amazing article but what evidence do you have, that the loan is not interest-free, despite the agreement signed by NELFUND that the loan is entirely interest-free?