Student loans in Nigeria are designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses.
In Nigeria, the significance of education for the growth of the country is an issue that has engaged the government over the years. The Nigerian Students Loans Board was first established in 1972, and between 1973 and 1991 it provided loans totalling ₦46 million, to help Nigerian students finance undergraduate or postgraduate study in Nigeria or abroad. There have been severe problems, however, and the rate of recovery of loan repayments has been very disappointing.
Although the funding of education in Nigeria has been riddled with setbacks and issues, there are a number of lenders who provide funding for students.
Paying Back Student Loans
Many student loan providers offer three basic ways that you can pay off your student loans:
First, you can choose to defer payments until after you’ve graduated. This means you won’t be required to pay anything on your student loan until you’ve graduated and the six-month grace period has ended. If you choose to defer all payments, your balance due will still accrue interest while you’re in school but you won’t be required to make any payments. In the long run, this is the most expensive way to pay back your loans since interest has considerable time to build.
The second option for repaying your student loans is to make interest payments while you are in school. These payments can be as low as ₦10000 or can cover the amount of interest that is accruing on the loan. When you graduate and have passed the six-month grace period, you will then begin making full payments on the interest and the principal. This method of repaying can save you a lot of money over the lifetime of your loan.
The third common option for repaying your student loans is to make full payments on both the interest and the principal while you are in school. This option can be hard for most students – after all, the reason you have a student loan is because you need help paying for college. However, if you can make full payments on your loan while you are in school, you can save a significant amount of money over the lifetime of your loan.
There are two types of interest rates that you can find for student loans: fixed and variable rates. Neither rate is inherently better than the other, but they do have some differences.
A fixed interest rate remains the same throughout the life of the loan, unless you refinance or consolidate your student loan. The lowest fixed interest rates are usually higher than the lowest advertised variable rates. This is because you are trading some flexibility for stability. The fixed interest rate can’t go up, and you will know the amount of your payments until you pay off the loan.
Variable interest rates often start much lower than fixed interest rates, but they can also go much higher. This is because variable interest rates are based on an outside, market-influenced rate. The Interbank Offered Rate and is the interest rate that banks use to lend money to each other. If the rate goes up, your variable interest rate will go up. Similarly, if it goes down, your variable rate could go down as well.
Deciding between a fixed and a variable interest rate for your student loan can be a bit of a gamble. If you want to risk the rate increasing, choosing a variable rate can often mean paying much less interest over the lifetime of the loan. However, if you want to know the exact amount you will be paying for your student loan each month, a fixed rate may be a better choice.
When taking on any type of debt, especially student loans, you should get all the information you can before making a decision. Make sure you study and understand the terms of your loan. Decide which loan features are important to you, which type of rate you want, and proceed. The right student loan can help you get a great university education and achieve your dreams.