Afe Babalola
Last week, I examined the provisions of the 1993 Education Bank Law and how the bank folded up due mainly to the failure of the government to set up the governing board for the bank contrary to the express provisions of the law setting up the bank.
This week, I intend to examine the Government White Paper on
the recommendations of the Ministerial Committee and other factors that
contributed to the demise of the bank.
It was found that a total of 225 members of staff who were
on the payroll of the bank were civil servants who failed to follow the civil
service rule. Most of them were appointed, transferred, seconded or promoted as
members of staff of the bank. Some of them were not promoted for a long time.
It was also found that a total of 49 members of the staff were current
pensioners and six were classified as pensioners outside unified pension
scheme.
The board was found to have approved the transfer of
N75million capital grant from the loans fund for investment in a mortgage
finance house which was in distress to the detriment of the primary objectives
of the bank law.
It was also found that the bank area offices tampered with
recovered loans. As at 10th October, 2001 the bank had no additional records of
loans balances in the CBN and commercial banks.
It is clear from the above that as has been the case with
virtually anything Nigerian, the “Nigerian factor” was brought to bear on the
Education Bank.
However, despite the identified flaws in the operation of
the bank, and the resultant decision of the government to wind it up, I still
remain of the firm conviction that there is a need for a student loan bank.
I am also of the view that the problems faced by the 1993
Education Bank should guide the new Education Loan Law approved by Tinubu
government.
This new law on Students’ Loan is headed Students Loans
(Access to Higher Education) Act, 2023. It contains explanatory memorandum
which states as follows:“ This act provides easy access to higher education for
Nigerians through students’ loan with a view to providing education for all
Nigerians”.
The Students Loans (Access to Higher Education) Act, 2023 is
said to be: “ABill for anAct to repeal the Nigerian Education Bank Act Cap.
N104, Laws of the Federation of Nigeria, 2004 and enact the Students Loans
(Access to Higher Education) Act, 2023 to provide easy access to higher
education for indigent Nigerians through interest free loans from the Nigerian
Education Loan Fund established in this Act with a view to providing education
for all Nigerians; and for related matters”.
“Subject to the provisions of any other enactment, all
students seeking higher education in any public institution of higher learning
in Nigeria shall have equal right to access the loans under this Act without
any discrimination arising from gender, religion, tribe, position or disability
of any kind”.
However, Section 14 restricts access to the Loan to Students
who have secured admission into Nigerian universities, polytechnics, college of
education or any vocational school established by the federal government or the
government of any state of the federation.
In other words, students in private university are excluded
from obtaining loans for education under this law. For avoidance of doubt,
paragraph 14(a) of the law provides as follows:
14(a) applicant must have secured admission into any of the
Nigerian universities polytechnics, colleges of education or any vocational
school established by the Federal Government or the Government of any state of
the Federation.
I am of the firm view that Students Loan should be available
to all students to pay for university tuition, books and living expenses. It is
to me discriminatory and unjust to exclude students in private higher
institutions from benefiting from the loan.
Experiences in other climes
In Australia, for instance, tertiary education is usually
funded through the HECS-HELP scheme which is in the form of loans that are not
normal debts and are paid over time via a supplementary tax, using a sliding
scale based on taxable income.
The import of this scheme is that loan repayments are only
made when the students have graduated and have income to support the
repayments. The debt does not attract normal interest.
In the United Kingdom, students’ loans are primarily
provided by the state-owned Students’ Loan Company. But unlike what obtains in
Australia, interest begins to accumulate on each loan as soon as the student
receives it, but repayment is not required until the start of the next tax year
after the student either completes or abandons his education.
Since 1998 for example, repayment has been collected by HMRC
via the tax system and are calculated based on the borrower’s current level of
income. If the borrower’s income is below a certain threshold 15,000 British
Pound Sterling per tax year for 2011/2012, 21,000 British Pound Sterling per
tax year for 2012/2013, no repayments are required, though interest continues
to accumulate.
In the United States of America, there are two types of
students’ loans: federal loans sponsored by the federal government and private
loans which broadly includes state-affiliated non-profit institutional loans
provided by schools. Interest does not accrue on subsidized loans while the
students are still in school. Students’ loans may be offered as part of a total
financial aid package that may also include grants, scholarships and/or work
study opportunities.
The Korean experience is not substantially different from
what has been discussed above. For instance, Korea’s students’ loans are
managed by the Korea Students Aid Foundation, KOSAF, an institution committed
to talent cultivation in charge of student aid and established in May 2009.
It is instructive to note that Korea has an ingrained
philosophy that the country’s future depends on talent development and so no
student is permitted to quit studying due to financial reasons as a result of
which Korea makes deliberate efforts to help students grow into talents that
serve the nation and society as members of the Korean society.
Through the management of Korea’s national scholarship
programmes, students’ loan and talent development programmes, KOSAF offers
customized students’ aid services and students’ loan programme.
It is a painful truism that our economy has not been as
healthy as expected. It is therefore no small wonder that Nigeria has not been
able to commit 26% of its resources to education as recommended by UNESCO. As a
matter of fact, more of the country’s resources have been committed to defence
because of the prevailing insecurity in the country as a result of which
education is unduly suffering an underserved under-funding.
There is endemic and grinding poverty all over the country
and this is largely because the government spends a lot on other areas and
particularly as Nigeria depends on oil as its sole source of income. For
example, there are no industries and so there are no opportunities for
employment and it is industries that employ most students coming out of
universities and not government.
But then, it must be appreciated that quality education
requires good schools, good and well equipped laboratories, good equipment,
highly qualified and committed teachers to pave way for proper education that
can only come to the fore where talents are expeditiously harnessed.
It is apposite to say that government should be able to
provide these facilities even if students have to pay school fees to ensure a
proper maintenance of these facilities. Consequently, government needs to adopt
a school fee-paying system backed up with loan system which would enable
students to pay fees.
Afe Babalola, CON, OFR, SAN is a Nigerian lawyer and founder
of Afe Babalola University.