The Nigerian Education Loan Fund (NELFUND) has disbursed about ₦355.87 billion in student loans, but a higher education policy think tank is raising concerns about how the Federal Government will recover the money when beneficiaries start repaying.
The concern is not that NELFUND has already recorded a repayment crisis. Most beneficiaries have not reached the point where repayment is due.
The issue is that the recovery system has not yet been tested on a large scale.
The iRead To Live Initiative, a Nigerian higher education policy think tank, raised the concern in a new policy brief titled Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme.
According to the organisation, Nigeria risks repeating the problems that affected earlier student loan schemes if it does not strengthen the recovery system before the first large group of beneficiaries enters the enforcement stage.
NELFUND has disbursed ₦355.87bn to students
NELFUND’s student loan programme has grown significantly since its portal opened in May 2024.
The iRead To Live Initiative said NELFUND had disbursed approximately ₦355.87 billion to about 850,000 unique beneficiaries by September 2026.
The size of the programme means the question of repayment is becoming increasingly important.
The think tank compared the current programme with previous student loan schemes introduced in Nigeria in 1972, 1988 and 1993.
It argued that those schemes struggled because the government was able to disburse loans but could not build an equally effective system for recovering them.
The concern is that NELFUND could face a similar problem if its recovery infrastructure is not strengthened before repayments become due.
Why NELFUND’s loan recovery could be difficult
NELFUND’s published terms state that beneficiaries who participate in the National Youth Service Corps are expected to begin repayment two years after completing NYSC. The terms also state that 10% of a beneficiary’s monthly salary can be deducted directly from source once the person is employed.
This creates a relatively straightforward recovery process for graduates who work in the formal sector.
But the Nigerian labour market is much larger than the formal payroll system.
Many graduates become self-employed, run small businesses, work freelance jobs or earn income outside a conventional employer-employee arrangement.
That is where the think tank sees a major gap.
If NELFUND depends heavily on employers to identify borrowers and deduct repayments from salaries, recovering loans from self-employed graduates could be much harder.
The iRead To Live Initiative therefore wants NELFUND to be connected to Nigeria Revenue Service income data.
The proposed integration would help the government identify income earned by self-employed borrowers and improve the ability to track repayments outside the formal payroll system.
The recommendation is particularly relevant because Nigeria has a very large informal workforce.
The think tank cited National Bureau of Statistics data showing that 93% of employment was informal in Q2 2024, while self-employment accounted for 85.6%.
This means an employer-based recovery system alone may not be enough to recover loans from future graduates.
The first real test could come around 2028
One of the biggest issues raised in the report is timing.
NELFUND has already disbursed hundreds of billions of naira, but the repayment performance of the current programme cannot yet be properly judged because the earliest beneficiaries have not gone through the full repayment and enforcement cycle.
NELFUND’s own terms provide for repayment two years after NYSC for beneficiaries who participate in the programme.
The iRead To Live Initiative estimates that the earliest enforcement window could begin around 2028.
That gives the government a limited period to strengthen its systems for identifying borrowers, tracking their income and collecting repayments.
The organisation said the period before the first major repayment window will be critical to determining whether NELFUND can operate sustainably.
The concern is therefore not simply how much money NELFUND has already disbursed.
It is whether the government can successfully recover enough of those loans to keep the scheme funded for future students.
NELFUND also faces questions over loan terms
The think tank also raised concerns about an apparent ambiguity around interest on the loans.
NELFUND publicly presents its student loans as interest-free, while the policy brief points to provisions in the Students Loans (Access to Higher Education) Act, 2024 that refer to the repayment of capital and interest.
The organisation wants the National Assembly to clarify the issue so beneficiaries and the government have a clear understanding of the financial obligations attached to the loans.
The 2024 Act was introduced to replace the previous student loan framework and establish a system intended to provide sustainable access to higher education.
For NELFUND, the bigger question now is sustainability.
The programme has already reached hundreds of thousands of beneficiaries and disbursed hundreds of billions of naira.
But the first major test will come when graduates start entering the repayment and enforcement stage.
If the government can build a reliable system for tracking formal employees, self-employed graduates and borrowers operating outside traditional payroll systems, the scheme could have a stronger chance of sustaining itself.
If recovery remains dependent mainly on formal employment deductions, the large size of Nigeria’s informal economy could make the task much harder.
For now, NELFUND’s loan recovery system remains largely untested at the scale the current programme will eventually require.
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