Student Loan: 10 Mistakes That Trap Nigerian Graduates

With university costs steepening, Nigeria’s “Student Loan (Access to Higher Education)” Act ushered new funding hope for students through interest-free debt financing.

But avoiding critical borrowing blunders remains vital to ease repayment except you want to remain a debtor for long.

Meanwhile, while the Nigerian student loans are interest-free, they are not penalty-free if unpaid beyond the stipulated duration.

Failing to repay loans or attempting to provide deceitful information to fraudulently avoid payments will lead to severe penalties.

Borrowers convicted of deliberate defaulting or parties that assist in repayment evasion schemes will face up to two years of jail time, fines of ₦500,000, or both punishments combined.

The law safeguards against falsified data provided in loan verification paperwork or any other tactics aimed at unlawfully bypassing remittance obligations after graduation.

The student loan Act gave birth to the Nigerian Education Bank specifically to oversee loans distribution based on set eligibility criteria.

Applicants from households earning under ₦500,000 yearly can secure funding for tuition payments exclusively.

However, the road to debt freedom still demands diligence.

As loan approval wait-times must not exceed 30 days, recipients must uphold disciplined habits after securing funds.

Here are 10 common student loan pitfalls for Nigerian borrowers to avoid under the Act:

Splurging Student Loan Beyond Tuition Purposes

Loans cover only tuition fees. Using funds for non-essential expenses will complicate future repayment.

Neglecting Loan Payments After NYSC

Loan repayment kicks off two years post-NYSC via 10% income deductions. Never miss installments once employed.

Trying To Outsmart Verification Systems

Attempting falsified data to cheat loan verification systems leads to ₦500,000 fines and/or two-year imprisonment.

Keeping Irresponsible Company

Abetting defaulters also attracts steep penalties. Carefully choose friends and contacts.

Overlooking Prepayment Options

Consider paying above minimum amounts to clear debt faster if financially feasible.

Disregarding Alternative Income Channels

Explore side hustles and passive income streams to boost repayment capacity.

Racking Up New Debts Unadvisedly

Avoid accumulating additional debts before fully clearing older student loans.

Not Prioritizing Emergency Savings

Start small rainy day funds alongside loan repayment for added financial stability.

Hiding Repayment Limitations

Openly communicate with banking authorities if unable to repay temporarily due to hardship.

Assuming Loans Get Forgiven Easily

Loan waivers only apply in extremely narrow cases, not for generalized inability to pay.

The 2023 Act eases Nigeria’s tertiary funding hurdles significantly. Still, prudent financial habits ensure students sidestep repayment pitfalls to fully leverage the revolutionary interest-free loans for a brighter future.