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Indebted for Knowledge’s Sake: A Look at Nigeria’s Student Loan Act

If policymakers in Nigeria instituted the Student Loan Act with an eye on Western-styled societal advancement, then history has offered them no vindication

On 12 June 2023, President Bola Tinubu signed into law the new Nigerian Student Loan Act. While due acknowledgments must be made for the undoubtedly good intentions behind the policy, the fact is that similar policies were introduced only relatively recently in the history of the Global North and have played an unhelpful role in the advancement of that part of the world. As a result, there is reasonable fear that the new student loan policy in Nigeria might replicate the debilitating effects on society and economy as it has done on countries of the Global North from where it was copied.

The Access to Higher Education Act, 2023, otherwise known as Student Loan Act, sets up the Education Loan Fund to assist Nigerians in financing their higher education. The expectation is that borrowers would begin making payments in instalments two years after completing the mandatory post-tertiary education National Youth Service Corps (NYSC) programme. A beneficiary is required to send 10% of their monthly salary to the fund at the end of each month. When a beneficiary is unable to return their debts, they are subject to a fine of N500,000 or a prison sentence of two years, or both, depending on the severity of the situation.

Africa’s dependency mindset

It is unquestionable that at the core of the Student Loan Act is a dependency mindset. The law shows that instead of thinking contextually to formulate an authentic funding mechanism for economically disadvantaged students, African policymakers tend to restrict themselves to what Europe and America currently have to offer.

Nigerian lawmakers are not an exception in this predicament.  Historically, post-independence African governments have struggled to wean themselves off the policy feeding tubes inserted during colonialism. For the most part, they continue to grapple with crafting organically generated, regionally relevant policies for national advancement. Yet, it is at the centre of this very struggle that the continent’s accelerated advancement quagmire is situated.

The student loan policy in the Global North

For centuries since the establishment of higher education in Europe and North America, scholarships and grants were gladly extended to students who were interested in pursuing university education but could not afford it. It was unthinkable to lure a young soul into a lifetime of debt for the sake of procuring education that would make them useful to society. The advent of neo-liberalism or free market economy in the United Kingdom, under Margaret Thatcher, commoditized higher education, turning it into an object of enterprise. By the time Thatcher left in 1990, the stage was set for the introduction of tuition fee payment and student loans in the United Kingdom.

Across the Pacific, the first recorded student loan policy in the United States at the federal level came around 1958. The policy was introduced in response to Cold War politics when American policymakers feared that the country was falling behind the Soviet Union in the production of trained personnel in selected fields. At that time, however, only very small loans were granted for courses that were needed in the fight against the USSR. With the ascendancy of neoliberalism in the United States in the 1970s and 1980s, students, in the eyes of the government ceased to be learners who were being nurtured to build society. Students became customers.

If policymakers in Nigeria instituted the Student Loan Act with an eye on Western-styled societal advancement, then history has offered them no vindication. For if there is one thing to be drawn from the very recent history of the student loan system in the Global North, it is that the system has played a negligible, if any, role in the advancement of that part of the world. Indeed, many historians, economists and social scientists are in agreement that the decline of the West across sectors can be traced to the neo-liberal philosophy that birthed the student loan system.

Effects of the student loan policy on Western societies

Quantitatively, student loans in the West might have helped citizens get an education and better their prospects, who otherwise would have found it difficult, if not impossible, to do so. Beyond the superficiality of figures, however, the student loan system has built a generation of psychologically displaced, vindictive debtors whose disgruntlement extends beyond the government to the larger social system.

Student loans have been found to have harsh economic effects on individuals, families, communities and nations. With the advent of student loans, nations become starved of critical manpower in certain vital areas. Education should help citizens explore and harness their innate potential. Rather than focus on their capabilities, students who borrow to fund their education, however, tend to go for courses with immediate and high rates of return on investment. What happens over time is that a country is unable to harness the natural talents and interests of young people in several sectors not considered lucrative.

Across the Global North, disgruntled workers are on the increase; these are people whose only emotional connection to their jobs is their pay packet. To give one instance, debt-ridden, cutthroat lawyers, are prowling the streets of America coercing people to file lawsuits, merited or not, against employers, family members and total strangers. As a result, the country is becoming a society where people are too afraid to make mistakes or to even lend a helping hand to someone in need, for fear of being sued.

Socially, student loans in the Global North are causing young people to delay marriage and childbearing, isolate themselves from the community, and even make them abandon older parents to move far away in search of higher salaries. The family, which is the fundamental building block of society, has become seriously threatened. With the fear of defaulting hanging like a guillotine over their necks, parents are unable to take time off from work, even if in turn, to care for young children. Exhausted working parents are left to raise babies equally exhausted and psychologically stressed from long hours in business offices labelled daycare centres.

In psychology, several studies have established the deeply traumatizing effects of student loans on young people in the United States. Many cases of suicide, depression and other forms of psychological ill-health have been attributed to student loan repayment challenges. In the United States, the highest rate of suicide is among the very well-paid medical doctors, who incidentally also borrow a lot to fund their education. Medicine as a profession was previously reserved for those committed to human well-being and comfort, today it is so deeply monetized that it becomes disconcerting to imagine its future in that part of the world.

The African spirit of Ubuntu where communities look out for their members in some way, especially in the extended family arrangement, will be adversely affected by the student loan policy. It is a common practice in many African communities for community members to contribute money to fund the education of young community members who cannot afford education. With the introduction of this policy, however, people might begin to wonder why they should contribute money to send a community member or ward to school when the person can apply for a student loan. And it follows that when such a person studies with a loan, he feels less attachment to the community, leading the continent to replicate the deeply isolating, lonely lifestyle of the West, which Mother Theresa called “the leprosy of the West.”

Ensuring a well-educated populace

The absence of student loans does not equal a less educated populace. University education is still tuition-free in many countries with some of the most educated populations, such as Sweden, Germany, and Finland. Student loans should not feature at all in the conversation about getting more citizens educated. The advent of student loans in the Global North came at a time when that part of the world had already reached advanced stages of development not before. Despite that, the effects of that policy are threatening to spiral out of control. There is no reason for African countries to copy such a faulty idea.

The first step is to address the issue of corruption. Nigeria is so naturally endowed that, but for corruption, no Nigerian willing and able to study should ever have to worry about funding. Tax evasion by multinational companies operating in Nigeria costs the country billions of dollars. Between 2007 – 2017, Nigeria lost over $178 billion to tax evasion. According to Nigeria’s Federal Inland Revenue Service (FIRS), “rich multinational corporations do not pay the right taxes due from them, let alone pay their taxes voluntarily.”

The unaccounted volume of minerals illegally carted away from Nigeria alone, can provide scholarships for all needy Nigerian youth. It has been estimated in some quarters that Nigeria loses about $ 3 billion annually to illegal export of mineral resources. Uche Ogar, Nigeria’s Minister of State for Mines and Steel, stated in 2021 that the nation had lost more than $5 billion in gold revenue between 2012 and 2018. The National Bureau of Statistics (NBS) estimates that illicit mining operations in the nation result in a loss of over $9 billion every other year.

Corruption, favouritism, and bureaucracy are all responsible for the failure of Nigeria’s education tax fund, which was set up to address numerous financial challenges faced in the nation’s education sector. If well harnessed, Nigeria’s education tax fund will go a long way in settling student’s tuition and fees.

Moreover, education-centred corporate social responsibility is a necessity and should be actively promoted among businesses and organizations in Nigeria.

The challenge here is to tackle corruption and ensure that whatever is generated is put to proper use. All avenues to curb corruption in Nigeria must be explored, including e-government solutions, as well as other intangible means. Forcing our youth to become indebted in order to study is akin to making young people pay for the corruption that has been the hallmark of the nation for decades, which is unfair.

Copying someone else’s work is considered a malpractice in educational settings; this similarly applies to copying educational policies from one country to paste on another.  Education, be it learning, curricula, pedagogy, administration, and its other aspects, yields benefits for societies when it is built on original ideas. Policymakers in Nigeria might have instituted the recent Student Loan Act with the best of intentions; however, conventions and precedents where that practice has been in place make it important to re-examine the policy before extending it to Nigeria’s youth.


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