The Nigerian Education Loan Fund: Changes in the 2024 Act & Guidelines for Application
The 2024 Act establishes the Nigerian Education Loan Fund as a corporate body that can sue and be sued, while the 2023 Act domiciled the fund in the Central Bank of Nigeria. Under the 2023 Act, the fund would be managed by a Special Committee and the money deposit banks. The 2023 Act states that the Special Committee would be headed by the CBN Governor.
The 2024 Act expands loan coverage to include student maintenance allowance or upkeep in addition to tuition, while the 2023 Act only covered tuition fees.
The 2024 Act removes the N500,000 annual income threshold to access a loan, while the 2023 Act set this as a requirement. The 2023 Act states that the family income of the applicant must be less than N500,000 per year.
The 2024 Act establishes a General Reserve Fund, while the 2023 Act just outlines sources for the Education Loan Fund. The 2024 Act includes National Assembly appropriation as a funding source, which the 2023 Act does not. The 2024 Act lists investment income, charges and fees by the Fund, and repayment of interest on loans as funding sources, all of which are not mentioned in the 2023 Act. Additionally, the 2024 Act removed the requirement present in the 2023 Act that 1% of taxes, levies, and dues accruing to both the Nigeria Immigration and Customs Services be allocated to the fund.
The 2024 Act appears to allow the Education Loan Fund to charge interest on loans, while the 2023 Act states that the loans are interest-free. The 2024 Act lists the repayment of interest on loans as a funding source. Additionally, the 2024 Act mentions the repayment of loans and "charges" but does not elaborate on what these charges are. Meanwhile, the 2023 Act explicitly states that loans are interest-free.
The 2024 Act only covers students in vocational schools licensed by the Federal Government, while the 2023 Act covers students at any vocational school established by the Federal and State Governments.
The 2024 Act mandates that the Board ensures the national spread of loans approved and disbursed each financial year, while the 2023 Act contains a non-discrimination provision to ensure equal access to the fund regardless of gender, religion, tribe, position or disability status.
The 2024 Act allows the board to make exemptions for loan repayments in cases of death, hardship, or for reasons of equity, while the 2023 Act does not mention any such exemptions.
The 2024 Act disqualifies beneficiaries of any loan or scholarship from the Federal Government or any of its agencies from receiving student loans, while the 2023 Act disqualifies any applicant whose parent had previously defaulted on any loan.
The 2024 Act creates a Board of Directors headed by a non-executive chairman and a management team headed by a Managing Director (assisted by three Executive Directors) to oversee the Education Loan Fund, while the 2023 Act assigns this responsibility to a Special Committee (chaired by the CBN Governor) and the money deposit banks.
The 2023 Act requires self-employed persons to submit their business details, including address, registration documents, and names of partners, directors, and bankers, within 60 days of assuming self-employed status, while the 2024 Act does not list this requirement.
The 2023 Act outlines a process for applying for loans, while the 2024 Act allows the Board to determine the application process. Under the 2023 Act, applicants must submit a cover letter signed by both the vice-chancellor, rector, or head of their institution and the dean of students’ affairs, their admission letter, and information for two guarantors. Applicants under the 2023 Act who are self-employed must also provide business details.
Under the 2023 Act, employers are mandated to deduct 10% of the beneficiary’s salary at source and credit to the Fund, while the 2024 Act states that deductions should not exceed 10%, meaning they can deduct less. For self-employed persons, the 2023 Act mandates a 10% deduction from their total monthly profit, while the 2024 Act does not define what portion of income should be deducted. The 2024 Act states that employers who are informed that their employee is a beneficiary of student loans from the Fund and has not completed repayment shall provide the Fund with information to collect the loan and any charges from the beneficiary, while the 2023 Act does not mention this. Lastly, the 2024 Act mandates that employers find out the student loan status of people they employ, while the 2023 act does not.
To be eligible, an applicant must be a Nigerian citizen, as defined in the Constitution of the Federal Republic of Nigeria 1999 (as amended). They must also provide their National Identity Number (NIN) and Bank Verification Number (BVN) as proof of citizenship. Additionally, applicants must meet the following criteria:
Fresh Entry - Applicants must have secured admission to an Eligible Tertiary Institution (ETI) through the Joint Admissions And Matriculation Board (JAMB).
Direct Entry - Applicants must have a valid JAMB admission to an ETI.
Full-time Undergraduate - Applicants must be enrolled in a full-time undergraduate program at an ETI and provide their matriculation number.
Applicants must also provide additional Know Your Customer (KYC) information, including their JAMB number, BVN (if over 18 years old), NIN, personal information (age, gender, phone number, address, email), and a passport photograph.
Disqualification Criteria
Applicants will be disqualified if they:
Have defaulted on previous education loans from the Federal Government of Nigeria, state governments, or their agencies.
Are currently benefiting from any other education loan or scholarship from the entities listed above.
Have been found guilty of misconduct such as plagiarism, cultism, violence, submitting fraudulent documents, or exam malpractices by a tertiary institution.
Have been convicted of fraud, forgery, drug offenses, felony, or any offense involving dishonesty.
Applicants must submit their applications online through the NELF website (www.nelf.gov.ng) during the application window determined and communicated by the Board. They will need to provide accurate personal and academic information and supporting documentation. Applicants must also complete and execute an online Attestation Form confirming they meet the eligibility requirements and have not engaged in any disqualifying activities.
The required supporting documents include a valid admission letter, student ID (optional), and any other documents determined by the NELF Board.
Loan Review and Evaluation
The NELF will verify all submitted information and documents for authenticity and accuracy. They will also evaluate applications based on mandatory, future and optional criteria.
Mandatory criteria include completing of the application and validation of the applicant's NIN, BVN, and admission details.
Future criteria involve verifying the applicant's attestation across various platforms and government agencies. Any false declarations will result in disqualification and immediate loan repayment.
Optional criteria may be set by the Board based on national development priorities and other factors.
The evaluation process is fully automated, with a turnaround time of seven calendar days after receiving the application. Applicants will be notified of the status of their applications via email.
Loan Approval and Disbursement
Applications that meet the mandatory evaluation criteria will be automatically approved. Successful applicants will receive an email notification with a loan agreement outlining the terms and conditions. Loan approval should take no more than 30 days after the mandatory evaluation.
Loan disbursement is subject to fund availability and will be paid directly to the ETI on the applicant's behalf. The disbursement will cover the applicant's institutional charges, which are verified and validated through integration with the institutions' databases and records.
Before disbursement, successful applicants must:
Execute the loan agreement on the NELF portal after reviewing the terms and conditions.
Complete and execute a Global Standing Instruction (GSI) mandate form, disclosing all qualifying accounts linked to their BVN.
The NELF will review the loan agreement and GSI mandate and recommend complete applications for disbursement. The Managing Director will then approve the disbursement, which will be paid electronically to the ETI within 30 days of approval.
Both the successful applicant and the ETI will receive a notification of the disbursement within 30 days. The ETI must then acknowledge receipt of payment and provide the beneficiary with a payment receipt within 7 days.
Loan beneficiaries are required to start repayment two years after completing National Youth Service Corps (NYSC) program or receiving an exemption. They must disclose their employment status to the NELF quarterly after completing NYSC.
Repayment options include:
Pay As You Earn (PAYE): 10% of the beneficiary's salary will be deducted at source by their employer and remitted to the NELF. Beneficiaries must inform the NELF of any job changes within 30 days.
Income-Based Repayment (IBR): Self-employed beneficiaries must remit 10% of their total monthly profit to the NELF and submit relevant business information within 60 days of becoming self-employed.
Beneficiaries can also make voluntary repayments at any time.
Failure to repay the loan will result in recovery actions such as warning notifications, restricted access to further credit, publication on a defaulters list, triggering the GSI to access and settle the loan from the defaulter's bank accounts, and legal action.
Legal and Ethical Considerations
The NELF operates in compliance with the Student Loans Act 2024 and other relevant national and international laws and regulations. They are committed to fairness, equity, and transparency throughout the loan process and adhere to the Data Protection Regulation (DPR) and the Nigeria Data Protection Act 2023 to protect beneficiary data.
By Aviel Avenante Law Practice
