Afe for Vanguard

July 5, 2023

Education Loan for Students by President Tinubu (3), By Afe Babalola

Fuel price hike

Unconstitutionality of Sections 17 and 18 of the Law

This week, I will continue my write-up on the students loan (Access to Higher Education) Act, 2023. According to the explanatory memorandum to the Act, the purpose of the Act is to ease access to higher education for Nigerians through students’ loan with a view to providing education for all Nigerians.

I have studied the provisions of the Act and one of the questions I ask myself is:

Whether the law is in fact made to provide education for all Nigerians.

Section 13 of the Law reads as follows:

13. The aims and objectives of the Fund shall be to –

(a) facilitate the mobilization of funds to provide interest-free loans to students of institutions of higher learning in Nigeria for the payment of tuition fees; and

(b)  ensure constant supply of loans to qualified students’ applicants for the purpose of providing education to all Nigerians

However, Section 14 of the same Law put an abrupt end to the readers’ joy when it provides that the loan is ONLY for students of institutions of higher learning established by the Federal Government or State Government. 

For ease of reference, Section 14 reads as follows:

14.  Students applying for loan under this Act must apply as provided under Section17 of this Act on satisfaction of the following conditions:

(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.

In other words, the loan facility is only limited to students in Federal or State institutions. Apart from dashing the hope of students who are not in Federal Institutions, the new law is unconstitutional and discriminatory.

Section 42 of 1999 Constitution of Nigeria particularly Sub section (a) and (b) provides that:

42 (1)  A citizen of Nigeria of a particular community, ethnic group, place of origin, sex, religion or political opinion shall not, by reason only that he is such a person- 

(a) be subjected either expressly by, or in the practical application of, any law in force in Nigeria or any executive or administrative action of the government, to disabilities or restrictions to which citizens of Nigeria of other communities, ethnic groups places of origin, sex, religion or political opinions are not made subject, or

(b) be accorded either expressly by, or in the practical application of, any law in force in Nigeria or any such executive or administrative action, any privilege or advantage that is not accorded to citizen of Nigeria or other communities, ethnic groups, place of origin, sex, religion or political opinions.

This reminds me of my criticism of the Federal Government Law which set up TETFund. 

The sources of revenue under Sections 1 and 2 of TETFundLaw read as follow:

1.  “As from the commencement of this Act, there shall be charged and payable an annual tertiary education tax which shall be assessed, collected and administered in accordance with the provisions  of this Act.

2. The tax at the rate of 2 percent shall be charged on the assessable profit of a company registered in Nigeria (in this Act referred to as “a company”)”.

The new Students Loan Act of 2023 provides in Section 12 where the money for this loan will come from:

Section 12 reads as follows:

12.     The sources of the Fund shall consist of – 

(a) education bonds;

 (b) education endowment fund schemes;

(c) 1% of all taxes, levies and duties accruing to the Government of the Federation from Federal Inland Revenue Service (FIRS), Nigerian Immigration Service and Nigerian Customs Service;

(d) 1% of all profits accruing to the Government of the Federation arising from oil and other minerals;

(e) all sums accruing to the Fund by way of donations, gifts, grant, endowment or otherwise; and

(f) other revenue accruing to the Fund from any other source.

In the case of TETFund, the money comes from Nigerians. Here again, the money for this loan is expected to accrue from Nigerians. 

In the case of TETFund, against continuous protest, only Federal and State universities benefit from the grant. This time again, students from private universities are being excluded. I do not believe that the government should wait for a court action on the illegality or constitutionality of the law before this section is amended to enable students from private universities to benefit from the loan.

Criminality of default in repayment of the loan

Section 18(6) of the law provides as follows:

“Anyone in default of the provision of Section 5, or found to be aiding the default of subsection (5), commits an offence and is liable on conviction to a fine of N500,000 or imprisonment for a term of two years or both.

It is my view that this section should be expunged completely and immediately. The purpose of the Students Loan Act, 2023 is to ease access to Higher Education for Nigerians. Section 14 of the Law provides as follows:

14.     Students applying for loan under this Act must apply as provided under section 17 of this Act on satisfaction of the following conditions:

(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.

(b)     Applicant’s income or family income must be less than N500,000 per annum.

Specifically, it provides that the borrower shall provide at least two guarantors. This is a simple contract between a lender and a borrower. It is not a case of stealing. If the borrower is in government employment and suddenly, he loses his job, that does not make him a criminal. Equally, if a parent is a businessperson and he suddenly suffers a downturn in his fortunes, certainly that is a good reason why he cannot perform his obligation. This does not make him a criminal. 

There are many other cases where the failure to pay as agreed may be an act of God (force majeure) cases where the failure of the borrower, a civil servant is due to the non-payment of salaries, gratuity or pension.

Assuming a student graduates without being able to secure a job or he loses his parent soon after leaving school, should the borrower go to jail? The law should be amended to ensure that the loan is secured with valuable properties built in cities. This is not a case of fraud which attracts jail. The only time crime can arise from a loan transaction is when money borrowed for a particular purpose is fraudulently diverted for other purposes.

The provision that defaulter must face a jail term should be expunged immediately.