Osun State Governor, Ademola Adeleke, met with the Nigerian Education Loan Fund (NELFUND) and expressed his concerns about the potential for Student Loan debt. He urged the Federal Government to learn from other countries’ experiences to prevent the program from becoming a financial burden for students. Adeleke commended President Bola Tinubu for creating the Fund to address student financial challenges. He pledged Osun State’s support and highlighted the state’s high participation in the program. He emphasized the importance of utilizing the Fund effectively to improve students’ lives.
Governor Adeleke is enthusiastic about the loan program’s potential to help struggling students across the state. He’s happy that Osun is at the forefront of this initiative and is committed to ensuring schools maximize the program’s benefits. However, he’s aware of the debt burden student loans can create in other countries. Adeleke pointed to the issue of student loan debt in the United States, emphasizing the need to avoid a similar situation in Nigeria. To avoid a similar situation, he urged NELFUND to develop innovative strategies to ensure the program’s Sustainability and prevent students from becoming trapped in debt.
Fixing the first attempt and building a self-reliant fund.
In April 2024, a significant shift occurred in Nigerian education with the signing of the Student Loans (Access to Higher Education) (Repeal and Re-enactment) Act. This Act represents a major overhaul of the 2023 version, aiming to address shortcomings and expand access to Higher Education and Vocational Training for Nigerian students. The initial 2023 Act faced issues related to governance, loan use, eligibility, application procedures, and repayment terms. Recognizing these challenges, the 2024 Act tackles them head-on by establishing a more robust and sustainable framework.
The Act establishes NELFUND as a corporate body with the power to manage its finances, enter contracts, and hold beneficiaries accountable for loan repayment. This empowers NELFUND to operate efficiently and ensure the program’s long-term viability. The program now caters to a wider range of qualified Nigerians. Importantly, the Act also tackles past limitations by removing the family income threshold for eligibility and eliminating the requirement for guarantors. This opens the door for students from all financial backgrounds to apply directly. Students from families of all economic backgrounds now have a fairer chance to pursue higher education or vocational training critical for career development.
Loan repayment approach is now more balanced.
Also, the Act creates a dedicated General Reserve Fund, primarily sourced from a portion of federal taxes (1% of all collections by the Federal Inland Revenue Service). This ensures a steady stream of resources for loan disbursement, operational expenses, and program development. This dedicated funding stream reduces reliance on unpredictable allocations and fosters long-term program stability. The Act recognizes the importance of vocational and technical skills training for national development. It allows students to apply for loans to cover expenses for approved vocational or technical skill programs at government-owned institutions. This empowers Nigerians to pursue career paths that align with their interests and contribute to the nation’s economic needs.
A more balanced approach to loan repayment has also been established in the Act. Repayment begins two years after completing mandatory national service, allowing graduates time to secure employment before repayment obligations begin. The Act also includes provisions for hardship deferment and debt forgiveness in the event of death or disasters that prevent repayment. The Act discourages false applications by making it a criminal offense punishable by imprisonment. This promotes transparency and responsible participation in the program.
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So, Governor Ademola Adeleke’s call to safeguard the Nigeria Education Loans Fund (NELFUND) from becoming a debt trap is good for ensuring sustainable financial aid for students. Learning from other countries’ experiences and implementing protective measures can help the country prevent the pitfalls of overwhelming student debt. The support and partnership between Osun State and the Federal Government also highlights a united commitment to improve education and provide relief to students in need. Going forward, the Fund needs careful planning and innovative management to succeed.