Student loans and the measure of poverty [OPINION]

By Abimbola Adelakun

On Monday, the President signed into law a bill establishing an education bank that will provide interest-free loans to “indigent students.” The clumsily titled bill, “An Act to Provide Easy Access to Higher Education For Nigerians Through Interest-Free Loans From Nigeria Education Bank Established in this Act with a View To Provide Education for All Nigerians and for Related Matters” has reportedly been in the works since 2016. According to presidential aides, the initiative will help “indigent students” fund educational pursuits in public institutions, be they in universities, polytechnics, or vocational training centres.

People object to student loans for many useful reasons, but this initiative does not yet look like it will ensnare the destinies of the students who take them. Whether it will be properly managed is another argument altogether.

Where things get interesting is the income requirement. To access the loan, the student or their family must not make more than a N500, 000 income per annum. For a law that will supposedly provide “easy access to higher education…for all Nigerians,” this is a curious characterisation of who belongs to the indigent class. If a law that supports the indigent pegs the income level at <N42,000 per family monthly, then we have an interesting inkling into what the government classifies as “indigent.”

Nigeria’s poverty rate has typically been measured through dollar figures. Presently, the official and international measure of poverty rate is counted as living on less than $1.90 daily. When the National Bureau of Statistics launched the results of the 2022 Multidimensional Poverty Index Survey that found that 63 per cent of persons living within Nigeria (133 million people) are multidimensionally poor, they did not mark their assessment of poverty through income level. They used other descriptive means. What resonates between those who calculate the average poverty rate in dollars and those who focus on qualitative means is that most Nigerians are poor and such poverty is not only about money but also access to certain facilities.

While a broad category of Nigerians will fall under the <N500, 000 mark, I still wonder at the image of the “ideal” (or un-ideal) low-income family that exists in the mind of the bill drafters and the government officials who pushed into a law. If such a family has a car, the average monthly sum they are not supposed to exceed is less than the costs of filling up the petrol tank under the new fuel pricing regime. I suppose it does not matter to the bill drafters how many people must comprise this hypothetical family, as long as they live on less than N42,000 monthly. Besides, how do they define their idea of “family” given the complexities of the Nigerian socio-cultural realities? Does “family” mean the nuclear variety or the extended one? Monogamous vs. polygamous families, which one?

In these very challenging economic times, earning even N5m annually does not take most families out of the indigent zone. Statistically, the average Nigerian spends more than 90 per cent of their income on food alone. Beyond eating, an average family in Nigeria also must buy diesel for their generator in addition to their paying for electricity, healthcare, security, education, and generally pick the slack in all areas where the government is lacking. You could earn ten times the figure used to set the mark for student loans for the “indigent” and still be impoverished. That is why it is curious that lawmakers would calibrate a loan facility meant for the indigent at N500,000 or less annually.

Even the Nigerian government that pays a N30,000 minimum wage has serially admitted that the sum gives people meager purchasing power. By setting income qualifications for student loans at N500,000 or less, the government shows how incoherently it conceives of the idea of indigence. While they accept, on the one hand, that majority of Nigerians are impoverished and their earnings cannot sustain them, their idea of indigence on the other hand is inchoate. You practically need to be destitute to apply for the loan.

Now, I quite understand that the government does not want the student loan funds abused by people who do not need them. However, tying access to the loans to such poor income earnings means the people for whom the loans are supposedly meant are exactly those who would be unable to access them.

First, in today’s Nigeria, living on N500,000 or less annually—either as an individual or as a family—means your chances of going to school and staying long there enough to aspire for tertiary or vocational education are already slimmed from the outset. It is a no-brainer that the people who live on < N42000 monthly (or <N1400 daily) are the ones least likely to go to even primary or secondary school and highly likely to drop out if they even get started at all. There are many foundational problems that one would encounter if one had to live within those means, and the promise of future loan access will not resolve any of them. Did the drafters of the bill conduct research that showed that people in the <N500,000 or less income category are in greater danger of being unable to pursue their educational pursuits than those who earn N43,000?

Second, the inflation rate in Nigeria is too high for any set sum to be reasonable beyond a few years. Why make a law about income requirements when what N500,000 was worth in January 2023 is nowhere close to either its present or future value? We do not need a soothsayer to foretell that today’s N500,000 will be a chicken feed in 2033. Those who debated the bill must be out of touch with Nigeria’s reality to assume that adjusting income requirements to a sum less than what even the least paid civil servant earns annually makes reasonable sense.

They should have left the income requirements segment open, so each family decides if they want to proceed or not. You could earn N10m annually and still need loan support because your four children happen to be in the tertiary institutions at around the same time. There is no reason to close off a major segment of Nigerians who will actually need the loan facility from accessing it. Life in Nigeria is too precarious to assume that all of us are not hovering around the indigent bracket. Realities differ, and bureaucrats need not be wading through sociological complexities to determine loan qualification. They should have let anyone wanting to take a loan do so, as long as they repay it.

Overall, restricting a facility meant for the “indigent” class to N500,000 and below shows that we are once again dealing with a general Nigerian problem of quantitative illiteracy. Nigeria has a problematic relationship with figures. We treat numbers like they are magical rather than a reasonable abstraction of reality, and that is why we tend to calibrate them inordinately. How can a country where a bag of rice costs around N40,000 bracket consider living on even a mere N42,000 monthly as anywhere outside indigence?

So, how do you intend to provide education for all Nigerians, as the newly signed law boasts, when you have a poor idea of what constitutes poverty in the country? How do you even generate the means of social uplift across all segments when you have yet to develop a reasonable idea of how much it takes to both survive and thrive within the present Nigerian socioeconomic realities? If the government fulfils its promises of increasing the minimum wage anytime soon, even the least paid worker will likely be thrown out of the income bracket that can get the loan. So, who are those indigent people for whom the education bank will be built?

Culled from The Punch