The Nigeria Education Loan Fund may encounter serious difficulties recovering the N355.87bn already disbursed to students unless the Federal Government urgently strengthens its repayment system, a higher education policy group has warned.
The warning was contained in a policy brief by The iRead To Live Initiative, which called for the integration of the Nigeria Education Loan Fund with the Nigeria Revenue Service’s income data to improve the tracking and recovery of loans.
NELFUND has reportedly provided loans totalling N355.87bn to about 850,000 beneficiaries since the launch of its student loan portal in May 2024.
The organisation said the government had approximately 18 months to put an effective recovery mechanism in place before beneficiaries from the first cohort become liable for enforcement after completing the mandatory two-year post-National Youth Service Corps grace period.
It argued that depending largely on deductions through employers would leave a significant number of borrowers outside the recovery net because many Nigerian graduates work in the informal sector, are self-employed or have no stable formal employment.
The initiative stated that linking NELFUND with the NRS income database would enable authorities to identify borrowers and assess their income for repayment purposes, particularly those who do not receive salaries through formal payroll systems.
It also raised concerns about the legal position of interest on the loans, pointing to an apparent contradiction in the Students Loans (Access to Higher Education) Act, 2024.
While the scheme has been publicly described as interest-free, the group noted that Section 17(1)(c) refers to the repayment of both capital and interest as part of the Fund’s revenue sources.
The think tank warned that unless the identified weaknesses were addressed before repayments commence, NELFUND could encounter the same sustainability problems that affected previous attempts to operate a national student loan scheme.
It, however, noted that the programme’s actual recovery performance could not yet be determined because no beneficiary cohort had entered the repayment stage.