The Federal Government has been urged to integrate the Nigeria Education Loan Fund (NELFUND) with the Nigeria Revenue Service’s income data to strengthen the recovery of student loans.
The recommendation was contained in a policy brief released on Monday by a Nigerian higher education policy think tank, The iRead To Live Initiative.
The brief, titled “Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme,” warned that the N355.87 billion disbursed by NELFUND to about 850,000 beneficiaries since the launch of its portal in May 2024 could be difficult to recover under the existing repayment framework.
The think tank said Nigeria had roughly 18 months to strengthen its loan recovery infrastructure 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 employer-based deductions would be inadequate because of the country’s large informal workforce, which includes many self-employed graduates and workers outside formal payroll systems.
“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 brief stated.
The initiative warned that without reforms, NELFUND could face the same sustainability challenges that undermined Nigeria’s previous student loan schemes.
“Nigeria has tried student loans three times before. Each one collapsed because loans went out faster than the government could ever recover them,” it said.
However, the think tank noted that NELFUND’s performance could not yet be assessed on repayment because no beneficiary cohort had reached the repayment stage.
“No cohort has yet reached the repayment window,” the brief noted, adding that the scheme’s real test would begin when repayments commence.
It further criticised the existing repayment architecture, particularly Section 28(4) of the Students Loans (Access to Higher Education) Act, 2024, which provides for employer-based deductions.
According to the initiative, the provision would not adequately cover self-employed, underemployed or informally employed graduates.
It cited Kenya’s Higher Education Loans Board as an example, noting that its integration with the Kenya Revenue Authority and credit bureaus had not eliminated repayment challenges, with 32.5 per cent of its loan portfolio reportedly in default as of June 2025.
The think tank said the Kenyan experience demonstrated that tax-authority integration alone could not eliminate recovery problems in economies with significant informal employment.
The initiative also called on the National Assembly to clarify the status of interest on NELFUND loans, citing an apparent inconsistency in the 2024 Act.
It noted that although the loans had been publicly presented as interest-free, Section 17(1)(c) of the Act lists “repayment of capital and interest” among the Fund’s revenue sources.
The brief warned that the discrepancy could expose the scheme to legal challenges from borrowers who relied on its public representation.
It concluded that the sustainability of NELFUND would depend on measures taken before repayments begin, rather than the amount already disbursed.
“Whether Nigeria breaks its decades-long pattern of failed student loan schemes will be decided by choices made now, not by the scale of what has already been disbursed,” the initiative stated.
