INVESTIGATING THE EFFECTIVENESS OF STUDENT LOAN SCHEME IN IMPROVING ACCESS TO EDUCATION AMONG UNDERGRADUATES IN FEDERAL UNIVERSITIES OF NIGERIA

CHAPTER ONE

INTRODUCTION

Background of the study

Student Loan Schemes in Higher Education operates in more than 70 countries around the world and at least thirteen (13) Loan Schemes in Africa in 2009 (John & Maria, 2020). The number of loan schemes is seemingly increasing every year. Various reasons have been given for the renewed interest in Student Loans particularly in developing countries. 

In the view of Woodhall (1992) cited by Bassey (2018), the renewed interest in student loan schemes is due to financial pressures on public budgets, governments giving higher priorities to primary and secondary education and trying to increase cost-sharing in higher education. Other reasons advanced by Woodhall (1992) cited by Bassy (2018), are: attempts to improve the efficiency of higher education, and believing that loans would result in a more equitable sharing of the costs of higher education. In Africa, there are a number of countries that have introduced student loan schemes. These include Kenya, Rwanda, South Africa, Ghana, Botswana, Tanzania, Zimbabwe, Uganda and recently Nigeria, among others. 

Specifically, the establishment of the student loan scheme is aimed at empowering Nigerians to pursue their academic aspirations. The loan scheme aims to reduce financial stress on students and families, as well as equal access to higher education for all eligible candidates. According to Akindele (2023), the student loans are common forms of financial aid that help students cover the costs of their education. They typically involve borrowing money for tuition fee, books, living expenses, and miscellaneous expenditures. These loans are usually repaid with interest after the student completes their education or when they enter the workforce (Mole, 2019).

As one of his initial actions as President, Bola Ahmed Tinubu enacted the Students Loans (Access to Higher Education) Act of 2023, with the objective of granting financially disadvantaged students the opportunity to pursue higher education (Premium Times, 2023). The bill proposes the creation of the Nigerian Education Bank, which will have the authority to oversee, coordinate, manage, and monitor student loans in Nigeria. The bank will receive loan applications from students in higher institutions in Nigeria, review the applications to ensure that they meet all the necessary criteria for loan approval under the Act (Chinedu, 2023). The bank is authorized to approve and distribute loans to eligible applicants. It is responsible for managing and overseeing the students' loan account/fund, ensuring that disbursements are made in accordance with regulations. The bank also monitors the academic records of loan recipients to track their graduation year, completion of national service, and employment status. This ensures that loan recipients begin repaying their loans promptly (Felix, 2023).

The bill stipulates that regardless of any conflicting provisions in other laws, all students pursuing higher education in Nigerian public institutions of higher learning shall have an equitable entitlement to obtain loans under this legislation, without facing any form of discrimination based on gender, religion, ethnicity, social status, or disability (Bamidele, 2023).

Research has indicated that Student Loans though removing the temporal financial burden from the student can either have a positive (Alonge, 2007; Chen & Smith, 2018) or a negative (Dwyer, McCloud, & Hodson, 2012; Kim, 2017; Paul & John, 2021) effect on student enrollment, continuity of their courses, or drop out from their courses. Therefore, this study will be investigating the effectiveness of student loan scheme in improving access to education among students in Federal Universities in Nigeria.

Statement of the Problem

The present administration of President Bola Ahmed Tinubu implemented the federal students' Loan Scheme with the objective of offering loans to alleviate the financial burden of underprivileged students in Nigeria. The objective of the initiative is to guarantee that insufficient financial resources do not serve as a barrier for any Nigerian to discontinue their studies at a tertiary level. Regardless of the purported efficacy of this programme as reported by the media, there is ample evidence to suggest that the majority of students in Federal Universities in Nigeria have failed to take advantage of this chance.

According to Ekpenyong (2023), the Act establishes a maximum income limit for obtaining the student loan. To be eligible, the applicant's income or their family's income must not exceed N500,000 per year, which is equivalent to N42,000 or less per month. Ekpenyong (2023) posits that the student loan was designed to help lower-income households, but its flat-rate provision fails to consider the economic conditions in Nigeria. As a result, public sector employees and lower-middle-income families who earn slightly above the income threshold specified in the Act may still face difficulties in affording higher education.

In addition, Akindele (2023) noted that section 13 of the Act delineated the goals and purposes of the Fund as the "mobilisation of funds to offer interest-free loans to students enrolled in Nigerian higher education institutions for the purpose of paying their tuition fees." Ekpenyong (2023) identifies two interconnected issues that arise from this clause. Nigeria implements a programme of providing higher education without charging tuition fees. This Act implies that the government is transitioning from a policy of providing free education to the implementation of tuition fees in public higher education institutions. Consequently, students who are ineligible for a student loan may experience a substantial increase in the cost of education, resulting in different outcomes depending on their socioeconomic level.

Furthermore, Ekpenyong (2023) points out that the Guarantor requirements outlined in Section 14 (c) of the Act not only display a significant socioeconomic prejudice but also disregard the socioeconomic variety within the country. The belief that a financially disadvantaged student or applicant would have access to specific professional connections, such as a civil servant (at least at Level 12), a lawyer with over 10 years of experience, a judicial officer, or a justice of peace, is excessively optimistic, given the substantial differences in social class and regional development in Nigeria. Specifically, individuals living in rural areas and economically disadvantaged urban areas may encounter difficulties in fulfilling these criteria, particularly because the Act mandates guarantors to provide evidence of their employment and banking information, a copy of their CAC registration if they are self-employed, and a letter acknowledging their responsibility in case of loan default. This scenario is expected to result in the systematic marginalisation of the working class in Nigerian society, particularly those without social networks, from being able to obtain loans (Hakeem, 2023).

 There are other additional deficiencies in the Student Loan Act. The text lacks a comprehensive analysis of various situations and unforeseen obstacles that may impede its primary goal of enhancing access to education for undergraduate students in Nigerian universities. Therefore, the necessity for this investigation arises

1.3 Objectives of the study

The primary objective of this study is to investigate the effectiveness of student loan scheme in improving access to education among undergraduates in Federal Universities in Nigeria. Specific objectives of this study are to:

Determine the extent the student loan scheme has improve access to education among undergraduates in Federal Universities of Nigeria.

Analyse the effects of student’s loan scheme on undergraduates education in Federal Universities in Nigeria.

Examine the challenges of accessing the student loans among undergraduates in Federal Universities in Nigeria.

Proffer solutions to the challenges of accessing the student loan among undergraduates in Federal Universities in Nigeria.

1.4 Research Questions

The following research questions will be answered in this study:

To what extent has the student loan scheme improve access to education among undergraduates in Federal Universities of Nigeria?

What are the effects of student’s loan scheme on undergraduates education in Federal Universities in Nigeria?

What are the challenges of accessing the student loan among undergraduates in Federal Universities in Nigeria?

What are the strategies put in place to address the challenges of accessing the student loan among undergraduates in Federal Universities in Nigeria?

1.5 Research Hypotheses

The following research hypothesis will be validated in this study:

Ho1: The extent student loan scheme has improved access to education among undergraduates in Federal Universities of Nigeria is low.

1.6 Scope of the study

Broadly, this study focuses on investigating the effectiveness of student loan scheme in improving access to education among undergraduates in federal universities of Nigeria. Specifically, this study focuses on determining the extent the student loan scheme has improve access to education among undergraduates in Federal Universities of Nigeria, and analyse the effects of student’s loan scheme and how it improves access to education among undergraduates in Federal Universities in Nigeria. Further, this study seeks to analyse the effects of student’s loan scheme and how it improves access to education among undergraduates in Federal Universities in Nigeria and to address the challenges of accessing the student loan among undergraduates in Federal Universities in Nigeria.

Selected undergraduates from Federal Universities in Nigeria will serve as enrolled participants for the survey of this study.

1.7 Significance of the study

This study will serve as a baseline for researchers and students and also guide government, policy makers to evaluate the needs of the citizenries. This research will also help to uncover the precise obstacles that are impeding the successful execution of these programmes. By doing so, it can provide policymakers with valuable insights into the necessary changes and enhancements required. This will help ensure that the loans are effectively distributed to the intended recipients and are managed in a sustainable manner Finally, this study will also serve as a reference material to students and researchers for further studies and future research.

1.8 Limitations of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. A significant constraint of the study is unavailability of financing for the researcher, since the researcher is a full time student and doesn’t earn to make a living. 

Another major limitation is absence of literature on the topic. Thus, much time and organization was required in sourcing for the relevant materials, literature, or information and in the process of data collection. Also the study is limited in sample size and geography covering only Federal Universities in Nigeria. Therefore, findings of this study cannot be used for generalization thus creating a gap for further studies. 

Also encountered was time constraint as the researcher had to carry out this research in addition to attending lectures and other educational activities required of him.

1.9 Definition of terms

Loan: a loan is the transfer of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money.

Student loan: A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses

Scheme: Scheme is a large-scale systematic plan or arrangement for attaining a particular objective or putting a particular idea into effect.

Student Loan Scheme: A Student Loan Scheme is a financial assistance initiative specifically created to assist students in covering the costs of their education. This programme often provides loans with advantageous conditions, such as reduced interest rates and adaptable repayment schedules, to finance tuition fees, textbooks, living expenses, and other educational expenditures. Typically, the government, banks, or other financial entities offer loans to students. Repayment typically starts when the student finishes their study and finds employment.