President Bola Tinubu today signed the Student Loan Bill into law. The bill allegedly seeks to provide financial assistance to university students in the form of interest-free loans. While Tinubu’s social media propaganda has gone into overdrive on this latest “achievement”, it is worth noting that the legislation approving this bill was passed by the National Assembly in November 2022.
The details about these loans are yet to be seen but there is talk that the loans will be administered by an “education bank”. Well, if the stories about fraud coming out of the Central Bank of Nigeria are to be believed, this “education bank” could become a case study in corruption.
Nigerians must wonder why, if money was available to fund interest-free loans for students, wouldn’t it be better spent investing it in improving facilities at public universities and providing tuition-free and adequate higher education? How would a student loan scheme be run in Nigeria – a country where record keeping is notoriously beyond parody? What about the costs of administering the loan scheme, chasing debt, defaulters, etc? There is very negligible consumer lending by commercial banks in Nigeria, so where is the evidence that a government-run “education bank” could run a student finance scheme? This looks on the surface like a license to print money for the people that will run the bank.
Countries like the US and UK that have entrenched student finance schemes have long recognised that graduate debt has a debilitating effect on economic growth. UK student debt is currently £100bn and projected to reach £1.2tn by 2049. It is estimated that 83% of graduates will never repay their debts. The average pay of UK graduates in 2022 was £24,291. Nigerian graduates are unlikely to average such pay in the near and distant future and are unlikely to be in a position to repay any student loans, assuming the “education bank” has the capacity to track them down. So what’s the point of setting up a loan scheme, to provide loans for students that are unlikely to repay? They might as well be given grants or bursaries as was the case in the 1970s and early 1980s.
There is no doubt that investment in education at all levels is vital for Nigeria to develop. Three World Bank specialists argued in this paper:
There is ample evidence of the role of education, including tertiary education, has played in boosting economic growth. One such example is the Republic of Korea which in 1948, was one of the poorest countries in the world. It grew to be the world’s 15th richest economy, however, by investing in and strengthening education at all levels, including providing universal access to tertiary education. Interestingly, already in the early 1980s, Korea started placing higher education in a lifelong learning context and has reaped the benefits of this decision ever since.
Tinubu, if he was serious about boosting economic growth, should be spending scarce resources on improving Nigerian universities to the standards they were long before he and his merry band visited themselves on the country in 1999 and created a situation in which all the ruling elite sent their children abroad for higher education. A student loan system can’t and won’t work for anyone in the country apart from those plotting to dish out loans to fictitious students.
