iRead To Live Initiative warns that N355.87bn already disbursed could face recovery challenges, especially from self-employed graduates.
The Federal Government has been urged to integrate the Nigeria Education Loan Fund (NELFUND) with income data held by the Nigeria Revenue Service to make it easier to track beneficiaries and recover student loans.
The recommendation was contained in a policy brief released on Monday by The iRead To Live Initiative, a Nigerian higher education policy think tank.
The organisation raised concerns about how NELFUND will recover the money already given to students when repayment begins, particularly because many Nigerian graduates may not work in formal employment where their salaries can easily be tracked.
NELFUND has disbursed about N355.87 billion in student loans to approximately 850,000 beneficiaries since its application portal was launched in May 2024, according to the policy brief.
The think tank said the government has roughly 18 months to strengthen the recovery system before the first beneficiaries who complete the required two-year post-National Youth Service Corps period become subject to enforcement.
Its major recommendation is for NELFUND to work with Nigeria Revenue Service income data so that the government can better identify and track graduates who become self-employed or earn income outside the traditional formal payroll system.
The organisation argued that depending mainly on employers to deduct loan repayments could leave a large number of beneficiaries outside the recovery system.
This is particularly important in Nigeria, where a large portion of the workforce operates outside formal employment.
The concern is simple: what happens when a student who collected a loan graduates, becomes self-employed and no longer has an employer from whom repayment can easily be deducted?
According to the initiative, this is one of the gaps that must be addressed before repayments begin.
Under the existing framework, beneficiaries are expected to begin repayment after the applicable grace period following completion of their National Youth Service. The 2024 Student Loans Act provides for repayment arrangements and allows the Fund to pursue recovery from beneficiaries.
The iRead To Live Initiative warned that Nigeria has faced similar difficulties with previous student loan schemes, with earlier programmes struggling to recover loans after disbursement.
It said NELFUND should therefore use the period before repayments begin to build a stronger system rather than waiting until beneficiaries start defaulting.
The think tank also pointed to international experience, citing Kenya, where the country's higher education loan recovery system has been integrated with the Kenya Revenue Authority and credit bureaus.
However, it noted that even such integration does not completely eliminate default, particularly in economies where informal employment is widespread.
The organisation therefore stressed that linking NELFUND with income data should be seen as part of a wider recovery strategy rather than a complete solution.
It also called on the National Assembly to clarify the legal position on interest payments under the NELFUND framework.
The group pointed to what it described as an apparent inconsistency in the 2024 law, noting that the loans have been presented publicly as interest-free while a provision of the Act refers to repayment of “capital and interest” as part of the Fund's revenue sources.
According to the think tank, resolving the issue early would help prevent confusion and possible legal disputes when beneficiaries begin repaying their loans.
The debate comes as NELFUND continues to expand its student financing programme, which was established to help Nigerian students overcome financial barriers to higher education. The Fund's official platform describes the initiative as a programme designed to improve access to higher education by providing financial support to eligible Nigerian students.
The student loan programme has attracted significant interest because it allows students who may otherwise struggle to pay tuition and other education-related costs to access financing.
But while giving students access to money is one side of the programme, recovering the loans when they become due is equally important if the scheme is to continue supporting future students.
The iRead To Live Initiative therefore believes that the government must begin preparing now for the repayment stage.
The organisation's warning is not that NELFUND has already failed. In fact, it acknowledged that no major beneficiary cohort has yet reached the repayment stage, meaning the effectiveness of the recovery system has not yet been fully tested.
Instead, the think tank is calling for the government to fix possible weaknesses before they become major problems.
The central message is that Nigeria cannot afford a situation where thousands of students receive loans but cannot later be located when repayment becomes due.
For the student loan programme to remain available to future generations, money must not only go out to beneficiaries; a workable system must also exist to bring repayments back into the Fund.
The proposed integration with Nigeria Revenue Service income data is therefore aimed at helping the government follow the financial journey of beneficiaries after graduation, including those who become self-employed.
The iRead To Live Initiative said decisions taken now will determine whether NELFUND can become a sustainable long-term education financing programme or repeat the problems experienced by earlier student loan schemes.
For now, the recommendation places the issue of loan recovery, income tracking and sustainability firmly at the centre of the conversation around Nigeria's student loan programme.
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