N355.9bn NELFUND Loans Face Recovery Risk

A higher education policy think tank, the iRead To Live Initiative, has warned that about N355.87 billion in student loans disbursed by the Nigeria Education Loan Fund (NELFUND) could face significant recovery challenges under the current repayment system.

In a policy brief titled “Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme,” the group said NELFUND had disbursed the funds to approximately 850,000 beneficiaries since the launch of its portal in May 2024. (Punch Newspapers)

The initiative urged the Federal Government to integrate NELFUND’s system with Nigeria Revenue Service income data to improve the tracking and recovery of loans, particularly from self-employed graduates and workers outside the formal payroll system.

It warned that relying mainly on employer-based deductions could prove inadequate given Nigeria’s large informal workforce.

The group noted that Nigeria has roughly 18 months to strengthen its recovery framework before the first beneficiaries become subject to enforcement after completing the mandatory two-year post-NYSC grace period.

It, however, stressed that NELFUND’s actual recovery performance cannot yet be determined because no beneficiary cohort has reached the repayment stage.

The initiative also called for clarification of provisions concerning interest on the loans, noting an apparent inconsistency between the public presentation of the scheme as interest-free and provisions in the 2024 Students Loans Act referring to repayment of capital and interest.

It warned that without stronger recovery mechanisms, NELFUND could face sustainability problems similar to previous student loan schemes in Nigeria.

The group therefore urged the government to strengthen the repayment infrastructure now, before beneficiaries begin entering the enforcement stage.