Rising default rate may frustrate student loan implementation

The rising loan default rate could prove a major set setback for the implantation of the Student Loan Act just signed by President Bola Tinubu, experts have warned.

Prof. Uche Uwaleke of the Nasarawa State University argued that unless proper measures are put in place to increase debt recovery, the Student Loan Act signed by President Ahmed Tinubu might not achieve significant success. He said this on the back of the rising loan default rate, saying the success rate might not match what obtains elsewhere.

President Tinubu, on Monday, said the law would help indigent students to complete their studies. Speaking with The Guardian in Abuja, Uwaleke stressed that an education bank is a good concept but that the major question is its feasibility in light of the country’s peculiarities.

“I have my doubts regarding the success of the student loan scheme unless certain preconditions are met. With the high unemployment rate in the country, it is difficult to see how the loans will be repaid as expected,” he noted.

According to him a scholarship board as opposed to a loan scheme would serve the purpose better.

“The difference is that the scholarship will only be given to brilliant indigent students who are motivated to achieve high grades in school knowing well that the scholarship is tied to their academic performance,” he stressed.

He argued that a loan scheme operating via an edubank is prone to abuse, especially by politicians who are likely to see it as another constituency project.

He added: “If previous experience is anything to go by, many of the beneficiaries will see it as free money. My idea of a federal scholarship board is a departure from what currently obtain. Given the country’s current difficult fiscal state, the beneficiaries will only be brilliant indigent students who have gained admission to study what I refer to as pillar courses.”

He explained pillar courses as those that have a direct bearing on the country’s developmental needs such as agriculture science, engineering, ICT, medicine and education.