The warning was contained in a policy brief by The iRead To Live Initiative titled “Can NELFUND Sustain Itself? Financing Nigeria’s Student Loan Scheme.” The group said NELFUND had disbursed ₦355.87 billion to about 850,000 beneficiaries since the student loan portal was launched in May 2024. The amount includes funding for institutional charges and student upkeep.
The concern is not that the loans have already defaulted, because no major beneficiary cohort has yet reached the point at which repayment enforcement begins. Rather, the think tank argues that the infrastructure required to recover the money is not yet strong enough, particularly for graduates who become self-employed or work outside Nigeria’s formal payroll system.
Under the existing arrangement, repayment is expected to begin two years after beneficiaries complete the National Youth Service Corps programme. The policy group estimates that Nigeria has roughly 18 months to improve the recovery mechanism before the first cohort reaches that enforcement window.
A major recommendation is for NELFUND to integrate its recovery system with Nigeria Revenue Service income data. According to the think tank, relying heavily on deductions through employers could leave a significant portion of borrowers outside the recovery net because many Nigerians earn their income through informal businesses, self-employment or employment arrangements that do not operate through conventional payroll systems.
The issue is particularly important because the student loan programme is expanding rapidly. NELFUND's latest figures show that 1,659,853 applications had been processed as of September 3, 2026, while ₦192.89 billion had been paid to 319 institutions as institutional fees and another ₦162.98 billion had been distributed as upkeep allowances.
NELFUND Managing Director Akintunde Sawyerr has previously acknowledged that the recovery question is becoming increasingly important. In an interview in August, he said the agency had not yet recorded loan recoveries and disclosed that the fund was spending about ₦16 billion every month on student upkeep. He also said the government was exploring additional funding sources to keep the programme running.
Sawyerr, however, has stressed that NELFUND should not be judged as though it were already experiencing widespread repayment failure. The programme is still relatively young, and the first beneficiaries have not yet reached the full repayment stage. He has also said the law allows NELFUND to seek donations, attract investment and generate income through investments, suggesting that government funding alone is not intended to be its permanent source of financing.
The policy brief also points to Nigeria’s previous experience with student financing. The initiative said earlier student loan attempts eventually collapsed because funds were disbursed without building an effective mechanism for recovering repayments. It cautioned, however, that NELFUND should not automatically be judged by the same outcome because its first repayment cycle has yet to begin.
Another issue raised by the think tank concerns the legal wording surrounding interest. It said the 2024 Students Loans (Access to Higher Education) Act has provisions that refer to repayment of capital and interest among the Fund's revenue sources, while the programme has been publicly presented as interest-free. The group called for the National Assembly to clarify the apparent inconsistency to prevent future disputes over the terms borrowers accepted.
The sustainability question therefore goes beyond the ₦355.87 billion already released. NELFUND has become an important source of support for students facing tuition, accommodation, transportation and other education-related costs, with demand described by Sawyerr as overwhelming. The programme's continued expansion means the amount requiring eventual recovery will also increase unless a dependable financing and repayment structure is established.
The immediate challenge for the Federal Government is to build that system before repayment becomes a crisis. Better access to income information, clear repayment rules and stronger tracking of graduates could determine whether NELFUND develops into a sustainable long-term student financing institution or repeats the weaknesses that affected earlier schemes.
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