Explore the essential requirements and step-by-step guide to getting a student loan in Nigeria. Know the eligibility criteria, interest rates, and repayment options.
Financial capacity varies among students; while some are financially sound, others require assistance.
Although scholarships are offered by certain institutions to lighten this burden, they are not accessible to everyone, making student loans a viable alternative for financing one’s education.
Understanding Student Loans
A student loan is a special type of loan designed to help students cover their education-related expenses, including tuition fees.
What sets it apart from other loans is its lower interest rate and more flexible repayment plan.
Types of Student Loans in Nigeria
Student loans in Nigeria usually come with a low-interest rate, available in two forms: variable and fixed interest rates.
Variable interest rates, while generally more affordable than fixed rates, may change according to market conditions.
Consequently, a rise in interest rates leads to an increase in variable interest rates and vice versa.
On the other hand, fixed interest rates remain unchanged throughout the loan’s duration.
Although lower fixed interest rates are typically higher than variable rates, they offer stability in exchange for flexibility.
Deciding on the rate type involves some risk assessment; fixed rates are suitable for those wanting to know exactly how much interest they’ll be paying, while choosing a variable rate means the interest rate on your loan may increase or decrease based on market fluctuations.
Application Process for Student Loans
When applying for a student loan, it is crucial to plan ahead.
Take into account the duration of your course and make an effort to complete your education on time to avoid additional tuition fees.
Think about ways to minimize your expenses to maximize your loan’s benefits. For example, consider sharing a room or maintaining your books in good condition for resale at the end of the semester.
Also, estimate your first-year salary after starting work and, most importantly, avoid borrowing more than you can afford.
This will enable you to repay the loan more comfortably and at your convenience. Keeping track of your expenses is key.
Many students are reluctant to take out loans because they fear being unable to repay them.
However, in Nigeria, loan companies offer the option to repay in installments either while studying or immediately after graduation.
Banks offering student loans in Nigeria include Access Bank, KeyStone Bank, Heritage Bank, Ecobank, and LAPO Microfinance Bank.
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Can I apply for a student loan if I attend a private institution?
No, the Act specifies that only students attending government-owned tertiary institutions are eligible for the loan.
What are the requirements for the guarantors?
The guarantors must be a civil servant of at least level 12, a lawyer with at least 10 years post-call experience, a judicial officer, or a justice of peace.
Can I repay the loan while still in school?
Yes, some loan businesses in Nigeria allow students to pay in installments while in school or immediately after graduation.
What is the maximum amount I can borrow?
The maximum amount you can borrow may vary depending on the lending institution. However, your or your family’s annual income must be less than N500,000 to be eligible for the loan.
Can I apply for the loan if I am an international student?
The Act does not specify any restrictions based on nationality, only that the student must be attending a government-owned tertiary institution in Nigeria.