AN INVESTIGATION INTO THE ROLE OF FEDERAL STUDENT LOANS IN REDUCING EDUCATIONAL INEQUALITY IN NIGER

CHAPTER ONE

INTRODUCTION

Background of the study

It is no doubt that the right to get education is fundamental for citizen of every nation whether developed or developing.  Unfortunately, having limited resources can lead to disparities in its acquisition. According to Nwaimo (2023), the educational system in Nigeria mirrors the stark disparities between the rich and impoverished, the educated and illiterate, and the religious and non-religious individuals. Unequal distribution of resources and the presence of highly skilled instructors in schools are key indications of educational inequality in any nation.

According Okpa, (2019) on a global scale, federal student loans have played a crucial role in expanding the opportunity for individuals to pursue higher education. In order to facilitate this expansion, the Nigerian government has implemented student loan initiatives via several financial institutions. As argued by Ihsiab (2019), these programmes are designed to provide financial aid to students from low-income households. The purpose of these loans is to provide financial support for tuition fees, lodging, and other associated costs, with the aim of increasing access to education for a wider portion of the population. The Federal Student Aid programme in the United States has facilitated the pursuit of higher education for several individuals hailing from low-income homes (Okpa, 2015). 

Apparently, the Nigerian Students Loans Board, founded in 1972, was among the first efforts to provide monetary assistance to students (NBS, 2020). Nevertheless, the programme encountered many obstacles such as insufficient finance, ineffective management, and a significant number of borrowers failing to repay their loans, ultimately resulting in its complete failure (Alagbe, 2022). The Education Bank and the Students Loans Scheme, implemented in the 2019 Finance Act, are recent initiatives aimed at revitalizing student loans. These measures seek to tackle the aforementioned concerns and provide stronger assistance to students (Federal Ministry of Education, 2020). 

In Nigeria, where financial impediments pose a substantial hindrance to pursuing higher education, the implementation of government student loans might serve as a pivotal factor in promoting equal opportunities. According to Okebukola, (2018), the allocation of federal student loans may have a substantial influence on educational disparity by enhancing the opportunity for disadvantaged individuals to pursue higher education. Research suggests that providing financial assistance may increase the likelihood of disadvantaged students attending college, decrease the number of students who drop out, and improve their academic achievement. Although federal student loans in Nigeria have the potential to provide significant advantages, their implementation is hindered by several problems. Securing sufficient finance, efficient management, and minimal default rates are crucial for the success of these programmes. Additionally, it is important to take into account socio-cultural aspects, such as the way loans are seen and the students' capacity to repay them (Alagbe, 2022). Therefore, the researcher sought to investigate the role of federal student loans in reducing educational inequality in Nigeria.

Statement of the problem

Over time, the enduring disparity in education in Nigeria has highlight the pressing need for efficient financial solutions. The provision of federal student loans has the capacity to greatly influence educational inequality by providing the essential financial assistance for students from low-income households to attain higher education. Nevertheless, if the difficulties related to execution, administration, and cultural acceptability are not adequately dealt with, the potential advantages of federal student loans may not be completely achieved.. In Nigeria, despite the many initiatives aimed at tackling educational inequality, substantial discrepancies in the availability of higher education continue to exist. The expense of higher education continues to be a significant obstacle for many students hailing from low-income households, deepening the gap between the wealthy and the underprivileged (Okebukola, 2018). Although government student loans have been helpful in other countries in addressing this disparity, their implementation and efficacy in Nigeria have not been properly scrutinized. 

In a study by Alagbe (2022). the implementation of a proficient government student loan programme in Nigeria encounters several obstacles such as insufficient fund, administrative inefficiency and unequal access to the fund. He further highlighted that securing sufficient money is crucial to address the needs of the growing population of students pursuing higher education and administrative efficiency is a crucial element that must be considered. If the programme has strong systems for distributing, managing, and recovering loans, there is a high chance that it will repeat the mistakes of previous failures Furthermore, the loan programmers’ viability is at risk due to the considerable worry of high default rates. Similarly, Okebukola (2018) mentioned that socio-cultural variables have a substantial impact on the adoption and effectiveness of student loan programmes. 

Conversely, Ashaolu, Afolabi & Olaniyi, (2015) pointed thatin  Nigeria, there is a widespread cultural reluctance towards borrowing money, which might discourage students and families from pursuing loans, even when they are in desperate need of financial aid and there is often a deficiency in information and comprehension about the mechanics of student loans, which further hampers their efficacy as a means of broadening access to higher education (Federal Ministry of Education, 2020). 

Hence, the need to investigate the role of federal student loans in reducing educational inequality in Nigeria.

1.3 Objective of the study

The broad objective of the study is to investigate the role of federal student loans in reducing educational inequality in Nigeria. The specific objectives is as follows

To ascertain the factors contributing to educational inequality in Nigeria educational system.

To evaluate the impact of federal student loans on access to higher education for students from low-income families in Nigeria.

To examine the role of federal student loans in reducing educational inequality in Nigeria. 

1.4 Research Questions

The following questions have been prepared to guide the study

What are the factors contributing to educational inequality in Nigeria educational system?

What is the impact of federal student loans on access to higher education for students from low-income families in Nigeria?

What is the role of federal student loans in reducing educational inequality in Nigeria?

1.5 Significance of the study

The significance of this study on the role of federal student loans in reducing educational inequality in Nigeria is manifold. Firstly, this study will provides empirical data that can inform policymakers and educational stakeholders. As the successes and shortcomings of the current federal student loan system, the research can guide the development of more efficient and equitable policies aimed at reducing educational inequality. This is particularly important for designing interventions that target underrepresented and financially disadvantaged students, ensuring that they have the same opportunities to pursue higher education as their more affluent counterparts. Secondly, the study will be significant to the academic community as it will  contributes to the existing body of knowledge on the subject matter and also serve as a guide for future research purposes.

1.6 Scope of the study

The study focuses on the role of federal student loans in reducing educational inequality in Nigeria. Empirically, the study will ascertain the factors contributing to educational inequality in Nigeria educational system, evaluate the impact of federal student loans on access to higher education for students from low-income families in Nigeria and examine the role of federal student loans in reducing educational inequality in Nigeria. 

Geographically, the study is delimited to Federal University (FUOYE) Oye Ekiti, Ekiti State.

1.7 Limitation of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraints are: 

Time: The researcher encountered time constraint as the researcher had to carry out this research alongside other academic activities such as attending lectures and other educational activities required of her.

Finance: The researcher incurred more financial expenses in carrying out this study such as typesetting, printing, sourcing for relevant materials, literature, or information and in the data collection process.

Availability of Materials: The researcher encountered challenges in sourcing for literature in this study. The scarcity of literature on the subject due to the nature of the discourse was a limitation to this study.

1.8 Definition of terms

Educational Inequality: The unequal distribution of academic resources and opportunities, including but not limited to, access to schools, teachers, funding, and educational materials, among students from different socio-economic, racial, and geographical backgrounds.

Federal Student Loans: Loans provided by the government to help students pay for their higher education expenses. These loans typically have lower interest rates and more flexible repayment options compared to private loans.

Socio-Economic Status (SES): An individual or family's economic and social position relative to others, based on income, education, and occupation.

Retention Rate: The percentage of students who continue their education at an institution from one year to the next, particularly focusing on their progression from the first to the second year of their academic program.

Academic Success: The achievement of educational goals, typically measured by grade point averages (GPAs), graduation rates, and the attainment of degrees or certificates.

Loan Default Rate: The percentage of borrowers who fail to repay their loans according to the terms agreed upon, often leading to legal actions or credit score damage.

Financial Aid: Funding that assists students in covering the costs of their education, which can include scholarships, grants, work-study, and loans.

Higher Education: Post-secondary education that includes universities, colleges, and other institutions offering academic degrees or professional certifications.

Disadvantaged Students: Students who face greater obstacles to education due to socio-economic, cultural, or geographical factors, often lacking the resources and support necessary for academic success.

Education Bank: A financial institution or program specifically designed to provide loans and other financial services to students to support their education.