A Nigerian higher education policy think tank has urged the Federal Government to strengthen the recovery system for the Nigeria Education Loan Fund (NELFUND) by integrating the Fund with income data held by the Nigeria Revenue Service.

The recommendation was contained in a new policy brief by the iRead To Live Initiative, titled “Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme.”

₦355.87 Billion in Loans Disbursed

The report comes as NELFUND's student loan programme continues to expand.

According to the latest reporting on the policy brief, NELFUND has disbursed approximately ₦355.87 billion in student loans to about 850,000 beneficiaries since its application portal was launched in May 2024.

The iRead To Live Initiative, however, warned that the ability of the Fund to recover the money remains largely untested because no beneficiary cohort has yet reached the repayment stage.

The think tank said the government has a limited window to strengthen the recovery infrastructure before the first beneficiaries become subject to repayment enforcement following the mandatory post-NYSC grace period. It estimates that there could be roughly 18 months to address some of the existing gaps.

Why Tax and Income Data?

One of the major concerns raised by the policy brief is the reliance on employer-based deductions for loan recovery.

The initiative argued that such a system may not adequately capture graduates who become self-employed, work outside formal payroll structures or operate within Nigeria's large informal economy.

It therefore recommended connecting NELFUND with income data from the Nigeria Revenue Service, which could help authorities identify borrowers and support recovery when repayment obligations become due.

The recommendation does not mean such an integration has already been implemented. Rather, it is a proposed reform intended to strengthen NELFUND's ability to recover loans from a wider range of beneficiaries.

Lessons From Previous Student Loan Schemes

The policy brief also raised concerns about Nigeria's history with student financing.

According to the initiative, Nigeria has previously introduced student loan schemes in 1972, 1988 and 1993, with earlier programmes eventually facing sustainability and recovery problems.

The think tank warned that NELFUND could encounter similar difficulties if loan disbursement continues without a sufficiently strong repayment and recovery system.

However, it also acknowledged that NELFUND cannot yet be judged in the same way as those earlier schemes because its beneficiaries have not yet reached the repayment stage.

Interest-Free Status Also Questioned

The policy brief reportedly raised another issue concerning the legal framework governing NELFUND.

While the loans have been presented publicly as interest-free, the initiative pointed to provisions in the Students Loans (Access to Higher Education) Act, 2024, which refer to repayment of capital and interest.

The group called for the National Assembly to clarify the position to prevent uncertainty or possible disputes over the terms of repayment.

What This Means for Nigerian Students

For current and prospective beneficiaries, the recommendation is primarily about the long-term sustainability of the student loan programme rather than an immediate change to existing repayments.

NELFUND has significantly expanded access to education financing, but the coming repayment phase will provide an important test of whether the programme can remain financially sustainable.

The iRead To Live Initiative is therefore calling for the necessary recovery mechanisms to be strengthened before large numbers of beneficiaries enter the repayment window.

The debate over NELFUND is now moving beyond how much money can be disbursed to students to a more fundamental question: how can the government ensure that the loan system remains sustainable when repayment begins?

FUTO Central will continue to monitor developments concerning NELFUND and Nigeria's student financing system.