The Nigeria Education Loan Fund (NELFUND) may face significant challenges recovering about ₦355.87 billion already disbursed under its student loan programme unless urgent steps are taken to strengthen its repayment system, a higher education policy think tank has warned.
The warning was contained in a policy brief by the iRead To Live Initiative titled “Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme.” The organisation said the current recovery framework remained largely untested because no beneficiary cohort has yet entered the repayment stage.
According to the report, NELFUND has disbursed approximately ₦355.87 billion to about 850,000 beneficiaries since the student loan portal was launched in May 2024, with the earliest enforcement window expected around 2028.
The think tank warned that the situation could repeat the challenges associated with Nigeria’s previous student loan schemes introduced in 1972, 1988 and 1993, which it said collapsed because loans were disbursed faster than they could be recovered.
It argued that the government has roughly 18 months to strengthen NELFUND’s recovery infrastructure before the first beneficiaries become subject to enforcement following the mandatory two-year post-National Youth Service Corps grace period.
A major concern raised in the report is the reliance on employer-based deductions to recover loans from beneficiaries.
The initiative said the approach may be inadequate in Nigeria, where a large proportion of workers operate outside the formal payroll system. It therefore recommended integrating NELFUND with income data held by the Nigeria Revenue Service to enable the government to track borrowers, including graduates who become self-employed.
The group said such integration would broaden the recovery system beyond formal employers and improve the government’s ability to identify beneficiaries when repayment obligations become due.
The report also pointed to Nigeria’s high level of informal employment as a major challenge for loan recovery. It argued that graduates who are self-employed or working outside formal payroll structures could be difficult to track under the existing framework.
However, the think tank acknowledged that it was too early to conclude that NELFUND would fail, noting that no beneficiary has yet reached the repayment window. It said the real test of the scheme would begin when the first group of beneficiaries becomes liable for repayment.
The initiative also raised concerns about an apparent ambiguity regarding interest on NELFUND loans. It called on the National Assembly to clarify the relevant provisions of the Students Loans (Access to Higher Education) Act, 2024.
The organisation noted that while the loans have been publicly presented as interest-free, Section 17(1)(c) of the Act refers to repayment of “capital and interest” among the Fund’s revenue sources. It warned that the inconsistency could create legal uncertainty for beneficiaries.
NELFUND’s student loan programme has expanded significantly since its launch, with the latest reported disbursement figure standing at ₦355.87 billion. Recent reports indicate that the Fund had processed more than 1.65 million applications as of September 3, 2026.
The policy brief said the sustainability of the scheme would ultimately depend on decisions taken before repayments begin, particularly the development of an effective system capable of tracking beneficiaries and recovering loans across Nigeria’s formal and informal economies.
