N355.9bn in NELFUND loans at risk as repayments near

About N355.87 billion in Nigerian student loans could become difficult to recover when repayments begin, a higher education policy think tank has warned. The iRead To Live Initiative said the government must urgently strengthen NELFUND’s repayment system or risk losing track of many borrowers.

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The scheme’s ability to recover the disbursed loans remains untested and structurally at risk, raising the same question that sank Nigeria’s three previous student loan attempts. What happens when repayment comes due, and the borrowers cannot be found?

In a policy brief titled “Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme,” the group urged the government to connect the Nigeria Education Loan Fund with income data from the Nigeria Revenue Service. That would help track beneficiaries and recover payments from self-employed graduates and other borrowers who do not work in the formal payroll system.

NELFUND has disbursed N355.87 billion in student loans to about 850,000 beneficiaries since opening its portal in May 2024. But the initiative said the fund’s recovery capacity remains untested. Its current framework relies heavily on employers deducting repayments, a model the group considers inadequate in a country with a large informal workforce.

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The central recommendation is straightforward: use the roughly 18 months before the first cohort’s enforcement window opens to integrate NELFUND with Nigeria Revenue Service income data, extending recovery capacity to self-employed graduates rather than relying on employer withholding alone.

The group said Nigeria has roughly 18 months to improve its recovery infrastructure before beneficiaries who complete the mandatory two-year post-National Youth Service Corps grace period become subject to enforcement. It described the central task as integrating NELFUND with tax authority income data before that window opens.

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Nigeria has tried student loans three times before. Each one collapsed because loans went out faster than the government could ever recover them.

The initiative warned that failure could create the same sustainability problems that undermined Nigeria’s three previous student loan attempts. It also stressed that NELFUND cannot yet be judged against those failures because no beneficiary group has entered the repayment period. The scheme’s real test, it said, will begin when repayments start.

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No cohort has yet reached the repayment window.