EVALUATING THE IMPACT OF STUDENT LOAN ON THE ACADEMIC PERFORMANCE OF STUDENT IN NIGERIA (A CASE STUDY OF THE UNIVERSITY OF ABUJA)

CHAPTER ONE

INTRODUCTION

Background of the study

Policy makers and development planners have acknowledged the crucial role of education in enhancing production, improving health, and offering a pathway out of poverty. Therefore, due to the significant role of education in the development of a nation, countries worldwide have been allocating resources to this crucial sector. The progress of a nation can be attributed to its level of human capital, which primarily includes education and health (Kakar et al., 2019).

Upward mobility is highly valued in the aspirations of every individual, as it is founded on the notion that individuals from modest backgrounds can advance their social and economic status by diligence and acquiring knowledge (Shedrack, 2017). Postsecondary education is becoming increasingly crucial for achieving that aspiration. Nevertheless, a significant number of students, especially those from low to moderate economic backgrounds, must depend on student loans, which encompass both government-issued direct loans and loans from commercial lenders, to fund their education (Ameh, 2023). A student loan is a financial arrangement specifically created to assist students in covering the costs of higher education, including tuition fees, textbooks and supplies, and living expenses (Jamal, 2018). It distinguishes itself from other loan types by offering a significantly reduced interest rate and the option to postpone repayment until the student completes their education. 

An excellent education is essential for a prosperous career, particularly in emerging nations such as Nigeria. As per Mole (2018), acquiring education from esteemed academic institutions can confer a competitive advantage to pupils in the labour market and establish a robust reputation for them. Traditionally, the cost of higher education has been considerable. However, the socio-economic environment has changed, resulting in increased accessibility for students from various economic and social backgrounds (Rilwan 2019). Student loans are essential in this procedure, providing benefits and conveniences specifically for contemporary students. According to Dennis (2019), these loans have a substantial influence on students' lives and establish the basis for their successful professions.

Higher education has a vital role in fostering economic growth and facilitating social mobility. Research indicates that there are higher levels of productivity and benefits associated with obtaining a higher education, specifically in comparison to completing primary education (Ilyasu et al., 2023). Hence, ensuring the accessibility and affordability of higher education is a paramount concern in academic and governmental deliberations across both developed and developing nations. A significant number of college students choose to utilize student loans as a means of financing their higher education. It is essential to fully grasp the consequences that these loans can have on academic performance and the successful attainment of a degree (Marshal, 2018).

Several experts argue that student loans have the ability to positively influence academic achievement. Njoku (2023) contends that the availability of financial assistance in the form of student loans has the potential to enhance the affordability and accessibility of education for students who lack the financial resources to cover their bills immediately. Consequently, this could serve as a catalyst for their active engagement in academic pursuits. This has the potential to enhance enrollment rates and facilitate greater access to higher education for a larger number of students.

The government has the authority to grant school loans depending on a student's capacity to find employment and their potential to make money. This enables students to become self-sufficient and relieves parents of financial obligations (Olaitan, 2023). In Nigeria, a significant number of middle-class and low-income households place a higher importance on education compared to health or retirement. However, recent data indicates that an increasing number of Nigerian youngsters are opting not to rely on their parents' funds for their education. 

According to Olaitan (2023), the student loan is seen as a means to ensure the family's financial stability and assist students in establishing a favourable credit rating. This credit rating is essential for multiple parts of adulthood, such as obtaining business loans, expanding businesses, and searching for employment opportunities. According to Abosede (2023), students who obtain school loans are more inclined to achieve higher academic performance, demonstrate effective work output, and strive for exceptional outcomes. In light of this context, with the University of Abuja serving as a specific example, this study aims to assess the influence of student loans on the academic achievements of students in Nigeria.

Statement of the Problem

Unfortunately, it is an indisputable reality that the Nigerian economy has not reached the expected level of strength and resilience. Consequently, it is unsurprising that Nigeria has failed to allocate 26% of its resources to education, as recommended by UNESCO. Pervasive and enduring poverty is prevalent across the nation; students encounter the obstacles of food insecurity and economic limitations in their pursuit of academic achievement and engagement in extracurricular endeavours. 

According to Isa (2023), student loans can impose a substantial financial strain on students, as they amass debt that must be repaid upon graduation. This responsibility can have an impact on the financial welfare of students, leading to stress and influencing their capacity to make significant financial choices, such as saving for the long term or buying a house. According to Santas et al. (2019), loan repayments can significantly reduce the income of recent graduates, making it difficult for them to meet basic living needs, save money for the future, or make critical investments like buying a house. Financial constraints may necessitate individuals to meticulously allocate their resources and make concessions in their day-to-day activities, deferring or reassessing their financial objectives.

Ultimately, the influence of student loan debt on students' academic achievement and overall well-being must not be disregarded. The persistent anxieties and diversions stemming from financial responsibilities can impede students' capacity to concentrate, so impacting their academic achievements. According to Olaitan (2023), the psychological burden of debt can result in heightened worry and have adverse effects on mental well-being. It is imperative for us to tackle this issue and establish support structures that lessen the weight of student loan debt. By implementing this approach, we establish a conducive atmosphere that enables students to actively participate in their academic pursuits, follow their interests, and eventually attain their educational objectives. There is a scarcity of research conducted on the subject of student loans and their influence on academic achievement, and no such study has been undertaken at the University of Abuja. This study aims to assess the influence of student loans on the academic achievement of students at the University of Abuja. 

1.3 Objectives of the study

The primary objective of this study is to evaluate the impact of student loan in the academic performance of student in Nigeria, University of Abuja as a case study. Specific objectives of this study are to:

Determine the extent student loan impact the academic performance of student in the University of Abuja

Find out the effects of student loan on the academic performance of student in the University of Abuja.

Assess the challenges associated with student loan assessment in the University of Abuja.

Proffer solutions to the challenges associated with student loan and its impact on the performance of student in the University of Abuja.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

To what extent does student loan impact the academic performance of student in the University of Abuja?

What are the effects of student loan on the academic performance of student in the University of Abuja?

What are the challenges associated with student loan assessment in the University of Abuja?

What measures can be carried out to address the challenges associated with student loan and its impact on the performance of student in the University of Abuja?

1.5 Research Hypotheses

The following research hypothesis will be validated in this study:

Ho1: The extent student loan impact on the academic performance of student in the University of Abuja is low.

Ho2: There are no effects of student loan on the academic performance of student in the University of Abuja

1.6 Scope of the study

Broadly, this study focuses on the impact of student loan on the academic performance of student in Nigeria: A case study of University of Abuja. Specifically, this study focuses on determining the extent student loan impact the academic performance of student, the effects of student loan on the academic performance of student, the challenges associated with student loan and its impact on the performance of student and the challenges associated with student loan and its impact on the performance of student in the University of Abuja

1.7 Significance of the study

This study will serve as a baseline for researchers and also guide students, government, policy makers to evaluate the audience needs. 

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. The significant constraint was the absence of literature on the discourse; impact of student loan on the academic performance of student and the parameters for measuring it in relation to whether it affects students positively or negatively. 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 University of Abuja. 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.

Academic: Academic is used to describe things that relate to the work done in schools, colleges, and universities, especially work which involves studying and reasoning rather than practical or technical skills.

Academic performance: Academic performance refers to the measurement of the learning level achieved by students and is considered a key indicator of the effectiveness of educational institutions. It is influenced by various factors including social, psychological, educational, economic, family, personal, and institutional factors.

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.