Government of Nigeria should regard student financial aid as an Investment February 22, 2011
Student financial aid package “consisting of grants and student loans” is funding designed to help students pay for education such as tuition, fees, books, supplies, etc. directly to educational institutions; generally universities, colleges, or private schools. We should not confuse this type of funding from government allocated to the federal ministry of education. The Student financial aid should be focused directly between Institutions and Individual Nigerian students.
The benefits of this student financial aid program are enormous for overall development of Nigeria and cannot be ignored. Its presence would positively influence and involve other major industries in Nigeria.
Benefits of student financial aid on a nation
Higher education adds tremendous value to the quality of life enjoyed by individual Nigerians, the strength of our nation's economy, and the health of our communities. Some of the benefits of higher education include:
Student financial aid is not necessarily money given out for free; it is also a very good business investment. In about 5 to 7 years the program starts making money off interest and repayment of loans. It can run independently within a decade or two, but continuous investments would be required to increase the coverage of student loans, making it available to more Nigerian students nationwide.
Student financial aid would bring in Investments, locally and internationally. This will drive the educational sectors to a level never witnessed in Nigeria. Present Institutions will have capital to invest in; infrastructure, equipment, research, training, expansions and hire world class educators improving the quality of education in Nigeria. In return the education industry will be very conducive for International Institutions to invest in the establishments of universities in Nigeria. All these will in return create millions of jobs across so many industries like; housing, construction, financial, transportation, technology, Consumer Products, and retail etc.
Nations like China and the United States of America who have invested relentlessly in education of its citizens are the nations leading the world right now. China’s investments in its citizens, some 20 to 40 years agois paying off three folds. The Government of China provided the capital for as many Chinese students as possible to enroll in universities and colleges all around the world. All while Investing in foreign educators who were training their Chinese peers concurrently. Today they lead in manufacturing and innovation. Two decades ago China would not even dream of building space shuttles, today they are helping Nigeria launch satellites to space. China did not get to this level miraculously but by systematically investing in education for as many citizens as possible in technological and professional fields. These citizens are now the ones leading China into greater heights.
The Government of Nigeria’s vision on education should not be treated like other government goals, by setting time limits for example “vision 20:20”. The vision for education should be continuously and vigorously chased. The longer the government of Nigeria neglects to recognize the value of educational Investments and the more time is wasted to start investing; the greater human and financial capital Nigeria will waste on other endless missions of development and perpetually remain dependent on the outside world for everything from innovation to the creation of jobs.
Proposed types of student financial aid
Grants and loans should be considered as basic aid.
Grant aids do not have to be repaid. Generally they should be aimed at educators, relatives of the Armed Forces, and special needs children and families, such as orphans and victims affected by natural or accidental disasters. The grant amount should be based on the applicant's financial need, by the information mediums to be determined such as tax reports and banking records, cost of attendance, and enrollment status.
Educators/Instructors: Grants should be awarded to educators, teachers, instructors In Nigerian educational institutions such as secondary schools, technical colleges, and universities. These educators with the backing of the federal government will enroll in International institutions of higher learning, on training programs of their field. This is very necessary to help educators acquire the skills and best practices to help educate the general population of Nigeria’s citizens. A trickle-down effect will improve; student education, teacher’s morale, and educational accreditation for greater Nigeria, just to mention a few.
Relatives of the Armed Forces: Including agencies such as police, the Navy, Army, Air Force, Efcc, Icpc, Customs, Immigration and any other agencies meeting these requirements. Children of members of these agencies should be rewarded with grants for putting their life in harm’s way for service to the nation. Grants should be provided after enrollment into an accredited Nigerian education Institution.
Loans are borrowed money that must be repaid with interest. Loan programs should allow undergraduate and graduate students to borrow money to cover their education expenses. Parents also should be able to borrow to pay education expenses for dependent undergraduate students. Generally, loan amounts should depend on the student's year in school, cost of attendance, and the amount of other aid received. Some loans should be based on the student's financial need and others should not.
Every Nigerian citizen planning to enroll, or is currently enrolled, in an educational institution should be able to qualify for application of these loans. Payments of loans should be deferred till after completion of programs and should be spread out on average 15-30 years, like a type payment, with reasonable interest, preferably lower than commercial loan rates.
Cost of program
Running a Student financial aid package program is capital intensive, for example the United States of America spends about $150 billion each year on student aid programs. That being noted, the Federal Government of Nigeria should make serious efforts to create an environment for future investments in the program. A $2 billion dollars startup investment should be set aside for the establishment of the student financial aid program. Also an educational bank should be created; charged with the sole responsibility of providing student loans to individual students/applicants. These loans would be paid directly to respective enrollment institutions, on behalf of respective students. Another $4 billion should be invested into the program annually, by the government. In 20 years, government investment into this program should amount to $78 billion. This is about half the average capital investments made by United States each year on a similar program; but a step in the right direction. With investment like this made by the government, it is almost certain to attract foreign direct investments that would match or surpass government investment. Potentially the educational industry in Nigeria should be close to a $10 billion dollar industry annually: and in 20 years 200 billion dollars.
Sustainability of a student financial aid program
As the student financial aid program grows, the program eventually will be able to sustain and function on its own. The majority of future government funds would be considered investments, to grow the program for wider coverage.
As loans begin to mature, payments will be made by recipients of these loans with interest year round; recovering these loans will not be a difficult process as those recipients/graduates are most likely to be employed first and earn a higher wage than a student with a diploma or secondary school equivalent. Payment should be spread out for a reasonable time period, say 15-30 years, making it easy for recipients to repay, as well as creating and building their credit history rating for future loans.
Possible funding Sources
The Government of Nigeria should consider some or all of these proposed possible funding sources available such as:
An educational bank would provide the medium for qualified citizens to pay for education to Institutions in Nigeria and aboard. It will also be the final destination of all revenues generated from federal, state agencies, taxes, donations, and repayments of loans and interest.
Its sole responsibility would be to provide educational loans. As the Central bank of Nigeria tries to figure out how to provide loans to majority of Nigerians with the best risk management possible, A student loan program would not only provide this opportunity, it will help grow the economy and have better monitory control.
A single recognized national organization “Education Funds” will coordinate solicitations for charitable donations, raise funds etc. for student financial aid nation-wide, and most importantly internationally. Working concurrently with the educational bank, international partners, and ; this fund will have the power to match or double every investment made internationally by the educational bank.
“Buy one get one free,” if a grant of $4000 is made for one scholarship, to a participating higher learning institution overseas on behalf of an applicant; with the efforts of an Education Fund, it could mean two or three scholarships totaling either $8000 or $12000 dollars.
This fund will have many other responsibilities including:
The fund would also act as guarantor in various ways related to education issues ranging from tuition, fees, debt consolidation etc.
State and federal government should be involved in the funding of a program to educate their future generations. For the program to be sustained and grow allocation of tax revenue yearly has to be put aside with the educational bank. A minimum of $2 billion dollars of tax payer’s money has to be allocated to the educational bank on a yearly basis.
The sovereign wealth fund will have to make investments into the student aid programs directly and indirectly, working with both the educational bank and Education Funds by attracting foreign partners to donate to Education Fund or, invest in the educational bank. It would make no sense to invest all that money overseas for the benefit of a nation of poorly educated citizens.
The national assembly will have to allocate at the minimum $1 billion dollars yearly to the educational bank. They must recognize how critical it is for intensive investments in “quality” education of majority of its citizens. If education is not the foundation of national development, the future of a bright Nigeria will be at risk.
China did not wake up one day, or even ten years ago and decide to be the fastest growing economy. For the last three decades, they made, and are still making the hard investment on educating their citizens. Today they are reaping just a few of those investments. It is very crucial that we turn around and start investing heavily in education.
Nigeria generates revenue annually of about $65 billion dollars from oil production and holds an average of $34 billion dollars in foreign reserves. The Government of Nigeria has to figure out ways to make this money work for the nation and not pack this money overseas. A portion of these funds have to be directly allocated to the educational bank.
Investment firms have to be engaged and enlighten about this program, lobbyist groups, not for profit organizations, and philanthropist, to mention a few, can significantly help fund this program; provided the Government is serious in investing in the program itself.
A Special Student financial aid tax should be applied to corporations in well-established industries in Nigeria. Industries such as the financial industry, NNPC, oil and gas companies, telecommunications, and construction should be included. As these organizations report record profits from Nigeria, it is only fair they share the sacrifice in funding the program for the development of our future. These companies should also work with the Education Fund to help attract investments into the program.
The Government of Nigeria can grow the education industry in the country by 800% in as little a few years. This in turn it will attract greater investments from outside Nigeria, and increase government tax revenues from benefiting institutions and companies. It’s a win for people and government. Note that a majority of this capital will never be lost, as repayments of loans flow in, this money will be recycled to fund new student loans.
We must understand that without these hard Investments made into education, Nigeria will never have the solid foundation it needs to stand as a global leader. Education for a nation cannot be a 10 or 20 year plan it must be a way of life. If government fails to invest intensely into education, all other investments made will be in vain. As human capital is the most important assets of any corporation or nation, Nigerian citizens need to have the proper skills and intelligence to innovate and produce for themselves as well as the nation. It will only happen if we have the right amount of investments channeled to create proper educational infrastructures, re-train educators, and employ the best minds. This will provide the current curriculum for the 21st century to Nigerian students.
I cannot stress it enough, if the government do not start investing heavily on the younger generation, Nigeria will not be able to sustain any meaningful development in the future.