‘N355.9bn NELFUND loans face recovery risk’

Nigeria’s student loan scheme has disbursed N355.87 billion to about 850,000 beneficiaries, but a policy brief warns that recovering the money could become difficult under the current repayment system.

The brief, titled “Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme,” was released by the higher education policy think tank The iRead To Live Initiative. It recommends connecting the Nigeria Education Loan Fund with Nigeria Revenue Service income data to help track borrowers who work for themselves or outside formal employer payroll systems.

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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?

The initiative said the government has roughly 18 months to strengthen recovery systems before beneficiaries who complete the mandatory two-year post-National Youth Service Corps grace period become subject to enforcement. It argued that relying mainly on deductions through employers cannot work effectively in an economy with a large informal workforce.

The brief described the scheme’s recovery capacity as untested and structurally vulnerable. It warned that Nigeria’s previous three student loan programmes collapsed because money was disbursed faster than the government could recover it. At the same time, the group said NELFUND cannot yet be judged by the same standard because no beneficiary cohort has reached the repayment stage. The real test will begin when repayments come due.

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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.