Student Loan or Loan Shark?

By Olayemi Olaniyi Jun13,2023 #Tinubu
Tinubu signs student loan bill into law

I’ve had just one experience with loans. It’s something I look back at with awe and dread. You know one of those how-did-I-survive-that experiences. It was during my national youth service in 2018/2019. My friend Matthew and I decided to buy one Samsung J6 each from a vendor who had a stall at the NYSC orientation camp in Kubwa, Abuja. The vendor had a loan package for anyone willing to buy a phone or laptop. As fresh graduates, Matthew and I were using low-grade Andriod phones. We didn’t have any money to fund our wants and guilty pleasures. We figured that was an opportune moment to buy a good phone for once in our lives.

I should add that at the time, it was heavily rumoured that the Buhari government was going to increase the monthly allowance for corps members from a minuscule N19,800 ($43) to N31,000 ($67). The phone cost N88,000 ($190) and the payment was spread out over 11 months. We thought by the time the government increased our allowance, deducting N11,000 from N31,000 per month wouldn’t hurt much. Sadly, the government did not increase our allowance and for 11 months, the bank deducted N11,000 from my paltry N19,800 allawee. I still don’t know how I survived those harrowing months. But I recall calling myself an idiot a lot. 

Loans are a gamble. You stake what you don’t have for an anticipated outcome. And when (or should I say “if”) you actualise that outcome, you then have a burden of debt to repay which usually would have been compounded with interest. Loans are a topic of public discourse right now following yesterday’s news of Tinubu signing the student loan bill into law. Depending on where you are on the political spectrum, you may either see this as proof that Tinubu indeed is working or may see it as an example of the political gimmickry designed to fool the public.

Already, public education is heavily subsidised in Nigeria. I went to a public secondary school where I paid just N900 per term. Even in college, I paid about N19,700 per session. In the grand scheme of things, one could argue I went to school almost for free. But even so, I recall some of my classmates in secondary school who defaulted on paying their N900 tuition. That taught me very early in life never to underestimate the level of poverty in Nigeria. But going to a public school in an underdeveloped nation like Nigeria often would come with certain tradeoffs. For one, public schools here are overpopulated. They often lack decent classrooms or lab apparatus. And of course, given the sheer population of students, teachers don’t have the time to adequately assess each student. 

Though education is subsidised, it’s strange the government wants to give out interest-free loans to indigent students. One would think if indeed the government wants to help indigent students, public education would completely be free and real attention would be given to the dilapidated structures in public schools. But if it’s impossible to make it free, the government could offer more scholarships to indigent students in addition to the few we have. 

It’s ill-advised to subject indigent teenagers and young adults to the stifling conditions of loans. These are people who are yet to get a full grasp of life. We have a culture where if you don’t go to college, you are considered a nobody. That pressure alone made a lot of us go to college whether or not we wanted to or whether or not we found knowledge titillating. Many of us realised immediately as freshmen that we shouldn’t have come to college; or as we like to say, school na scam. But we stayed because of shame. After our programmes, many decided to start life afresh and pursue something new. I can only imagine what life would have been like for us if we took loans to get a degree we ended up regretting or hating.

For those who end up practising what they studied in college, what are the chances they will earn a reasonable salary to the extent they will be able to repay their loans? Think about it; can the average teacher repay their student loan? In Nigeria, there are certain guarantees: the Dollar will rise, inflation will increase and wages will remain the same. How is someone expected to repay their student loan with all that? To think defaulters may either end up in jail or pay a N500,000 fine for not earning enough or even getting a job is actually laughable. Where is someone who could not repay their loan expected to see N500,000 all of a sudden?

The government better take a cue from how Nigerians often default in repaying loans they take from the plethora of loan apps available today; the Palmpays and Opays of this world. There is a running joke on Twitter about how Palmpay agents often harass customers who default in repaying loans. And as you know, some of these loan apps contact friends and families of defaulting customers. That should teach the government that it’s always easy to take a loan but repaying often proves difficult. Not to mention the grim economic conditions millions of Nigerians find themselves in today. The truth is a lot won’t pay back these loans even if they wanted to.

I understand the need for a new president to want to signal how serious they are. They want to show how well they mean business. The burden to want to justify themselves to those who voted for them and also convince doubters often makes them engage in symbolic gimmickry. But that type of politics should never influence laws. I’m not sure Tinubu thought this through before signing this bill into law. Of course, illiteracy is a serious problem in Nigeria and any serious government should take education seriously. And even though this loan comes interest-free, it has all the trappings of a loan shark given the horrid economic conditions that will prevent a lot from repaying. 

Instead of this, Tinubu should make education free in Federal universities and ensure admissions are given on merit. Invest in education infrastructure. But if it’s impracticable to make education free, then offer scholarships to indigent students who gained admission into federal universities. There could be a CGPA clause for them to maintain the scholarship. That’s fine. And others can pay tuition. Otherwise, it’s unfair to subject a bunch of inexperienced teenagers who are yet to fully develop their pre-frontal cortex to the gruelling realities of what is essentially a loan shark, however well-intentioned.

By Olayemi Olaniyi

Olayemi is the publisher of The Disaffected Magazine. He also hosts the Disaffected Nigerian Podcast. He enjoys everything from Evolutionary Psychology to the syncopations of Apala music to Fela's discography. He fancies himself as an Amala enthusiast. His dream is to be a travel writer someday. He can be reached on X @LukeOlaniyi.  

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