FG proposes 30% TETfund allocation for student loans

The Federal Executive Council is proposing a bill that will direct 30% of Tertiary Education Trust Fund allocations to the Student Loan Scheme.

The bill aims to amend Section 3 of the Tertiary Education Trust Fund Act No. 16, 2011, titled ‘Establishment of the Tertiary Education Trust Fund.’

Mr. Bayo Onanuga, Special Adviser to the President on Information and Strategy, said this while briefing State House Correspondents at the Aso Rock Villa in Abuja on Wednesday.

According to Onanuga, this former part of the omnibus Economic Stabilisation Bills (2024) was considered and approved at the Council meeting on Monday for onward transmission to the National Assembly.

If approved by the National Assembly, TETFund will set aside 30 per cent of its initial allocation from the Federation Account to support the Nigerian Education Loan Fund.

It reads, “The Fund shall, before disbursement of the amount in the Fund, set aside in each year (a) one-third of the amount to be transferred to the Nigerian Education Loan Fund established under the Students Loans (Access to Higher Education) Act.”

The bill also puts a five per cent cap on TETFund’s annual administration.

It said, “An amount not exceeding five per cent of the total monies accruing to the Fund in the preceding year, which shall be applied for – (i) the cost of administration and management of the Fund, necessary for the due administration and implementation of the purpose of this Act, (ii) the maintenance of any property acquired by or vested in the Fund and generally to pay for services rendered to the Fund, and (iv) any other expenditure as may be approved by the Fund, from time to time, in connection with all or any of its functions and powers under this Act.”

Onanuga explained that the proposed legislation would serve as a sustainable resource stream for student loans.

“Some of us may have wondered how we are going to fund the loans we are giving to Nigerian students. Most of the funding will now come from the money going to TETFund.

“So there’s an amendment to the TETFund Act that was made in 2011 that now says that the fund shall, before disbursement of the amount in the fund, set aside an initial one-third of the amount to be transferred to the Nigerian Education Loan Fund. That is, 30 per cent of whatever TETFund gets from the federation account will now be passed on to NELFund, which will provide a ready funding source to NELFund.

“Also, TETFund has been pegged to spending only five per cent of its income on its administration. That is, whether it wants to do capital projects in its office or wants to pay salaries, it cannot spend more than five per cent of whatever accrues to it from the Federation Account. That’s the maximum it can get according to the fund. So, 30 per cent of TETFund is now going to fund the NELFund, and five per cent to fund its own operations,” Onanuga explained.

He stated that the Federal Government was proposing the modifications to the law because “TETFund cannot just build assembly houses or laboratories without making sure that students can use those facilities with loans from NELFund.”

He stated that the new allocation was just “supplementary” and that “there will also be budgetary allocation from the Federal Government to NELFund all the time.”