Nigeria offers students loans – they want jobs

There is excitement at Esther Abu’s home, where the mother and daughters have just heard about a new law that will allow poor Nigerian families to receive loans to send their children to university.

Ms Abu’s youngest, a teenager who speaks like he’s rapping, will drop out of secondary school next month. She loves computers, but knows that her mother, a single mother whose salary as a street sweeper barely provides enough to feed the family—and is supplemented mainly by handouts from her church—doesn’t have the money to get her to university to send .

Her eldest graduated from secondary school two years ago and immediately started working as a hairdresser to support the family living in Mararaba, a crowded suburb on the outskirts of Abuja.

“When I was a girl, I dreamed of being a doctor,” says 21-year-old Eunice.

Both now stand a chance, albeit slim, of rekindling their dreams as the government announces it will provide loans to pay for tuition for those from such poor backgrounds. However, many questions have been raised about the system.

Since taking office in late May, President Bola Tinubu has rolled out a raft of reforms at lightning speed – scrapping fuel subsidies, devaluing the naira, sacking central bank governors and security chiefs – and his latest goal is to revitalize Nigeria’s ailing tertiary education sector.

For decades, the government has kept fees low to encourage enrollment in a country where many are poor and illiteracy is high.

While medical students at the University of Lagos in Nigeria’s wealthiest state pay just 25,000 naira (£32; $26) a year, their fellow students at the University of Ghana in Accra pay 3,500 cedis (£242; $308).

However, these low fees have not been offset by government funding over time, resulting in schools having outdated equipment, overcrowded classrooms, and poor pay for faculty and other staff.

The average Nigerian university professor takes home less than 500,000 naira (£570; $725) a month, while a research assistant gets 160,000.

Those conditions have fueled incessant strikes that last year caused universities to remain closed for eight months – the ninth break in 13 years.

The strikes and lack of adequate funding have shaken confidence in Nigeria’s public universities, forcing people to enroll in expensive private institutions or study abroad, particularly in Eastern Europe.

With the introduction of the loans, President Tinubu has given universities free rein to increase tuition fees, which the government estimates are now affordable for students from poor families.

The President says the program will “expand access to education for all Nigerians, regardless of their background.”

The interest-free loan will be repaid as a monthly deduction of 10% of the beneficiary’s salary two years after completion of mandatory paramilitary postgraduate service.

“But what if they finish school and don’t get a job?” asks Ms. Abu in a low voice that silences the room.

This question has been asked repeatedly by students and their parents across Nigeria since the program was announced two weeks ago.

Large numbers of college graduates enter the Nigerian labor market every year, but few find a job.

In the last survey in 2020, one in three who wanted to work was unemployed and millions of graduates went into jobs that did not match their qualifications, such as hairdressing.

“I know at least 200 graduates in my village who went back to farming after school because they were unemployed,” says Ayuba Mayah, a student at the College of Education in Zuba, Abuja.

He won’t take out the loan, he says, to avoid the burden of finding a job after graduation. Instead, he works to fund his education.

Aminu Sadiya and Mercy Sunday, who both study economics at the same university, agree that their main concern when taking out the loan is finding a job.

“My parents didn’t think about a loan before they sent me to school, they will find a way to pay the fees,” says Ms Sunday, whose parents are farmers.

Although Mr Tinubu has promised to halve the unemployment rate in three years by creating millions of jobs for young people, the new law is silent on graduates being unable to repay the loan because they are unemployed.

However, those who become self-employed risk a two-year prison sentence or a fine if they refuse to pay back the loan equal to 10% of their monthly profits.

However, the loan is not available to everyone – it is specifically designed for students who come from households with annual incomes of less than 500,000 naira.

In theory, millions could benefit, but the conditions for taking out a loan are strict.

Poor families have to prove they earn so little, which means they have to provide bank statements, which many of them probably won’t have.

Applicants must also provide at least two guarantors:

It was pointed out that poor Nigerians are unlikely to know such people and where they do, the chance that such a person will sponsor a loan is slim.

Even if the requirements are met, the applicant is not guaranteed the loan, as it depends on the availability of funds.

“They should just say they don’t want anyone to have access to the credit,” says Vanessa Macaulay, a third-year mass communications student at Yaba College of Technology in Lagos.

The chairman of the university lecturers’ association also describes the loan conditions as “not practicable” and adds that more than 90 percent of the students would not meet the “requirements”.

But other academics, such as Professor Mudashiru Mohammed, who heads the Department of Education Management at Lagos State University, say many of his students are unable to pay despite tuition being just 30,000 naira (£34, $43) per semester.

He says the conditions were necessary to ensure people make their payments in a country where most see government credit as free money.

While it’s difficult to measure the financial background of students in public college, many at the University of Abuja tell the BBC they come from low-income backgrounds.

Their training is funded by parents and guardians, who are young civil servants, private security guards and company drivers.

The total income of such families is often just above the threshold, making the loan unattainable even though they are not doing well by Nigerian standards.

These families have already been hit by the doubling of transport prices, and food costs have also skyrocketed recently.

Now they have to grapple with tuition fees, which have risen by as much as 200% at some universities – which have been considering an increase since last year.

The loan is for tuition only and excludes other fees such as room and board, which usually make up a higher proportion of the university’s total cost.

“If they don’t pay for everything, what’s the point? Who buys books, pays for the lodging and food?” asks Ms. Abu, while the chatter in her house has long since died down.

“They should have made the loans available to every student,” says Caleb Issac, a self-funded part-time student at the National Open University in Abuja.

In his spare time he works as a marketer for a transport company and fears that a fee increase could hit him hard.

This isn’t Nigeria’s first attempt at providing a student loan – an initial plan by the military government in 1972 fell through because beneficiaries refused to repay it, says Prof Mohammed.

“Perhaps the President should have focused on creating jobs first,” says Ms. Abu.

The lack of jobs, other associated fees, and a lack of clarity about what happens to employees who default on their repayments mean the loan isn’t working for her family, she says.

“It’s better for my daughters to learn trades and get small jobs than to go to school and face jail,” she says.