The financial aspects of a good education are unavoidable, and while some students may be financially capable, others will have to depend on assistance. Some universities offer scholarships as a means of lessening this burden, but, not all students can qualify for one, and student loans are an alternative for financing one’s education.
A student loan is a kind of financial investment to assist students with school-related needs. These needs include tuition, books, living expenses and school supplies.
What is a Student Loan?
A student loan is designed to help students pay for education and its associated fees. This loan differs from other kinds of loans in the sense that the interest rate is relatively lower, and the repayment schedule is much more flexible.
Originally introduced by Femi Gbajabiamila, the immediate past Speaker of the House of Representatives, the bill underwent reintroduction in 2019 and garnered increased attention from the National Assembly in November 2022. Notably, this occurred shortly after an eight-month-long industrial action by the nation’s university workers’ union, which had protested poor working conditions and other grievances.
According to the newly passed act, the Fund will be financed through various channels and will engage in other productive endeavors.
Today, there are several loan apps for students that can help them scale through school without financial burdens.
Types Of Student Loans
Typically, student loans have a low-interest rate, and there are two types of rates available. Variable interest and fixed interest. A variable interest is usually lower than a fixed rate; however, they can fluctuate because they depend on the rates in the market. So if the rates are up, the variable interest will increase and vice versa.
Fixed interest rates, on the other hand, remain constant throughout the life of the loan except you consolidate. Lower fixed interest rates are usually higher than the variable rates as you are trading flexibility for stability. Knowing the kind of rates to choose can be a bit of a gamble.
If you want to see the interest you are paying on loan; the fixed rate is for you. Choosing a variable rate means you may pay a higher or lower rate on loan over time, depending on the market forces.
What To Do When Applying For A Student Loan
When applying for a student loan, you should plan first. Be sure of the number of years the course you are taking requires and put it into consideration. You should work very hard to finish school at the appropriate time. This meaning doing your everything in your power to avoid an extra year. We most certainly are aware of the implications of an extra year are. Extra tuition fees
Also, think of ways to keep your expenses low so that you can make the most out of the loan. For example, you can share a room with someone or keep your books in good condition so you can resell them at the end of the semester.
Make an estimate of your first salary per annum when you start working. More importantly, try not to borrow more than it. Doing this will enable you to pay back faster and at your comfort. All you really have to do is manage your expenses well.
Most of the time, students are skeptical about taking student loans because. They are worry because they feel they may not be able to pay back.
However, loan companies in Nigeria have the option of paying in instalments while in school, or immediately after graduation. Some banks that grant student loans in Nigeria include: Access Bank, KeyStone Bank, Heritage Bank, Ecobank and LAPO Microfinance Bank.
Who can apply for a student loan in Nigeria?
As per the Act, eligibility for the loan is limited to students attending government-owned tertiary institutions once the program is implemented.
“Subject to the provisions of any other enactment, all students seeking higher education in any public institution of higher learning in Nigeria shall have an equal right to access the loans under this Act without any discrimination arising from gender, religion, tribe, position or disability of any kind,” Section 2 states.
According to Section 23 of the Act, “institutions of higher learning” include public universities, polytechnics, colleges of education, and vocational schools established by the government.
To be eligible for the loan, an applicant’s income or family income must be less than N500,000 per annum.
Additionally, students must provide at least two guarantors who meet the following criteria:
- A civil servant of at least level 12.
- A lawyer with at least 10 years post-call experience.
- A judicial officer.
- A justice of peace.
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Conclusion
To conclude, when you are taking student loans, be sure to understand the loan terms and try to get as much information before deciding.
Related Post: 5 Ways To Access Student Loans in Nigeria
