NELFUND’s N355 billion loans at risk as recovery system remains untested – Report

NELFUND risks repeating the failures of Nigeria’s three previous student loan schemes unless it strengthens its loan recovery system before repayments begin, according to a higher education policy think tank, the iRead To Live Initiative.

In a policy brief released on Monday titled ‘Can NELFUND Sustain Itself?‘ Financing Nigeria’s Student Loan Scheme, the initiative warned that the student loan schemes introduced in 1972, 1988 and 1993 collapsed because loans went out faster than the government could recover them.

The report noted that NELFUND has disbursed roughly N355.87 billion to about 850,000 beneficiaries with the earliest enforcement window expected around 2028.

What the report is saying

The iRead To Live Initiative drew a direct comparison with Nigeria’s previous student loan schemes, pointing to what it described as a recurring pattern of rapid disbursement without a sufficiently tested recovery system.

• “NELFUND is now moving through the same early phase that preceded every prior collapse, generous disbursement, untested recovery, and a financing base that leans more on political discretion than on the statutory formula its own founding Act sets out,” it said.

The initiative said Nigeria will only know whether NELFUND has broken from the pattern of the previous schemes when the first cohort reaches the end of the enforcement grace period.

• “Nigeria will not know whether NELFUND has broken from the pattern of 1972, 1988, and 1993 until its first cohort reaches the end of Section 28(3)’s enforcement grace period, around 2028,” it noted.

It said the period leading up to that point would be critical, with several unresolved issues potentially determining the sustainability of the scheme.

• “What happens between now and then, whether recovery infrastructure gets built, whether the interest ambiguity in Sections 17(1)(c) and 28(4) gets resolved, whether the Development Levy yields what Section 17(1) promises, will determine which outcome Nigeria gets,” it said.

NELFUND has about 18 months to fix recovery system

The report said NELFUND has a limited window to strengthen its recovery system before the first borrowers become subject to enforcement.

• According to the initiative, the earliest cohorts could reach the end of their two-year post-NYSC enforcement grace period around 2028, leaving roughly 18 months to strengthen the recovery system.
• The initiative’s central recommendation is to integrate NELFUND with Nigeria Revenue Service income data, particularly to capture graduates who become self-employed.
• Under Section 28(4) of the Students Loans (Access to Higher Education) Act, 2024, repayments can be made through deductions of not more than 10% of a beneficiary’s gross income, with employers playing an important role in withholding repayments.

The iRead To Live Initiative argued that this approach could be problematic in an economy where most workers operate outside formal payroll systems.

It cited National Bureau of Statistics data showing that 93% of employment was informal in Q2 2024, while self-employment accounted for 85.6%.

Get up to speed

NELFUND’s student loan programme has expanded significantly since its application portal opened in May 2024, with the Fund’s disbursements rising as more students access financing.

• In March 2026, Nairametrics reported that NELFUND had disbursed N206.29 billion to 1.16 million beneficiaries across 270 institutions, covering tuition fees and student upkeep allowances.

The Federal Government has also taken steps to strengthen NELFUND’s funding base as its obligations grow.

• In August, Nairametrics reported that President Bola Tinubu directed that legally cleared liquid funds recovered by the EFCC and unclaimed dividends from designated trust funds be channelled to NELFUND to support the student loan programme.

More recently, Nairametrics reported that NELFUND debunked claims that beneficiaries could face life imprisonment for failing to repay their loans. The report noted that NELFUND’s disbursements had risen to N355.87 billion, with the Fund processing 1,659,853 applications as of September 3, 2026.

What you should know

The Federal Government is also pursuing broader reforms aimed at improving the quality and competitiveness of Nigeria’s tertiary education system.

Earlier this month, Nairametrics reported that the government plans to strengthen Nigeria’s national tertiary institution ranking system and develop a framework that could serve as a benchmark for higher education institutions across Africa.

The proposed framework will extend beyond universities to cover polytechnics and colleges of education, with the government saying the system is intended to better reflect Nigeria’s educational environment, institutional priorities and development needs.