"N500,000 fine or imprisonment": FG Lists Penalty for Refusal to Pay Back Student Loan
- The Federal Government has introduced a policy to enable students in tertiary institutions to get interest-free loans to pay for tuition
- As interesting as the loan is, it can only be approved for students that meet certain conditions
- Students who default from paying back the loans at the agreed period will be prosecuted by legal means
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On Monday, June 12, 2023, President Bola Tinubu took a significant step by endorsing a bill that establishes an education bank aimed at offering interest-free loans to Nigerians pursuing higher education.
The bill as sponsored since 2016 by Femi Gbajabiamila, a former Speaker of the House of Representatives and current Chief of Staff of the President.
The primary objective of the bill is to facilitate access to federal government loans for economically disadvantaged students, particularly those pursuing higher education at the tertiary level.
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Benefits of student loan
Although the recently signed Act has attracted different opinions from different people, Legit.ng however, highlights some of the advantages of taking a student loan.
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1. Opportunity to pursue education: Student loans will guarantee access to education and open up educational opportunities that may otherwise be financially unattainable. By alleviating immediate financial constraints, students are able to concentrate on their studies and make the most of their educational journey.
2. Versatile payment alternatives: Student loans often provide borrowers with flexible repayment options to accommodate their unique circumstances. Such flexibility grants students valuable time to secure employment and build a solid financial base before commencing repayment.
3. Improve employment opportunities: A student loan can significantly enhance your career prospects by providing the means to pursue higher education. This investment in your education can greatly increase the likelihood of earning a degree or certification, leading to improved job opportunities and a higher income potential in the future.
4. Financial flexibility: By utilizing a student loan, individuals can reserve their existing funds for other critical living expenses or personal investments, providing them with the necessary financial flexibility to navigate their academic journey without undue financial strain.
Loan repayment process
Beneficiaries of the loan will be expected to initiate repayment two years after completion of the compulsory National Youth Service Corps.
The repayment process involves a direct deduction of 10% from the beneficiary's salary by their employer, which will be credited to the loan account.
In cases where the beneficiary is self-employed, they are required to remit 10% of their monthly total profit to the designated student loan account specified by the bank.
The self-employed person will be expected to provide the commission with all relevant details, including the business name, address, location, registration documents, registered status, banking information, partners' names, as well as the names of directors and shareholders within 60 days of assuming that status.
Penalty for loan defaulting
Any individual who deliberately defaults on payment or is discovered to be assisting in the violation of any provisions outlined in this Act will be deemed to have committed an offense.
Upon conviction, the individual may face a prison sentence of two years, a fine of N500,000, or both penalties concurrently.
FG Disqualifies Five Categories of People From Obtaining Student Loan
In related news, Legit.ng reported that certain categories of individuals have been deemed ineligible for the loans and they include:
1. Applicant who has been proven to have defaulted in respect of any previous loan granted by any organisation.
2. Applicant found guilty of exam malpractice by any school authority.
3. Applicant with a criminal record of felony or any offense involving dishonesty or fraud.
4. Anyone who has been convicted of drug offenses
5. Applicants whose parents (father or mother) have defaulted in respect of student loans or any loan granted to him or her.
Source: Legit.ng
