The Nigerian Education Loan Fund (NELFUND) has begun piloting a tokenised payment system designed to prevent students from paying school fees already covered by the fund and reduce refund complications, with nearly 400,000 applications received under the ongoing process.
NELFUND Managing Director Akintunde Sawyerr disclosed this on Wednesday during a press briefing, explaining that the proposed system would allow students to authorise payments directly to their institutions through tokens linked to their respective schools.
Under the arrangement, students would use a mobile application to initiate payments from their approved loan funds to designated institutional accounts, rather than receiving the money in their personal bank accounts.
Sawyerr said the initiative was intended to address cases in which students paid their fees without knowing that NELFUND had already transferred the money to their institutions.
He explained that delays in communicating completed payments had led some beneficiaries to pay their fees independently, resulting in duplicate payments and subsequent refund requests.
“We discovered that there were some issues with students being informed in good time that their payments had been made by NELFUND, which meant that some of them would pay because they hadn’t realised that NELFUND had paid already,” he said.
Sawyerr illustrated the problem with an example in which NELFUND paid an institution on Monday, but a student who was unaware of the transaction paid the same fees by Wednesday and only learnt of the earlier payment on Friday.
“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.
According to the managing director, the new system would reduce such incidents by allowing students to initiate payments themselves, with the funds transferred directly to their institutions.
“We want to eliminate that need for refunds. So we’re placing the power of payment in the hands of the students,” Sawyerr said.
He explained that students would receive notifications when their approved fees were ready for payment and could then authorise the transactions through their phones.
However, the system would not give students unrestricted access to the funds. Instead, it would allow them to initiate payments while restricting the money to the institution for which it had been approved.
“We’re not giving the students money, but we’re giving them power,” he said.
Responding to questions about whether beneficiaries could transfer the funds to personal accounts after receiving them in a digital wallet, Sawyerr said the tokenised arrangement would prevent transfers to both personal accounts and other institutions.
“The system, the token, not only can they not transfer it to their personal account, they can’t transfer it to any other school,” he said.
He explained that a student with an approved fee payment of N200,000, for instance, would only be able to authorise payment to the designated institution.
“If they don’t push the button, the money doesn’t go anywhere. It will never be able to be transferred to the personal account of the student or anybody else,” he said.
NELFUND Executive Director Mustapha Iyal further clarified that the token would be linked to a specific institution rather than a personal or mobile money wallet.
“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said, adding that the token could only be used to direct payments to the institution attached to it.
Iyal confirmed that the pilot had commenced, with nearly 400,000 applications received at the time of the briefing.
“As I speak to you, we already have close to 400,000 applications,” he said.
However, the officials did not specify how many of those applications had been processed through the pilot, nor did they announce a timeline for full implementation.
How the new system fits into NELFUND’s loan scheme
NELFUND administers the Federal Government’s student loan scheme established under the Students Loans (Access to Higher Education) Act, 2024. The programme provides eligible Nigerian students with interest-free loans to cover institutional charges and, where requested and approved, upkeep expenses.
Under the existing arrangement described on NELFUND’s official website, approved institutional charges are paid directly to students’ institutions, while upkeep allowances are transferred to beneficiaries’ bank accounts.
The proposed tokenised system focuses on institutional fee payments and does not, based on the officials’ explanation, replace the existing arrangement for paying approved upkeep allowances.
The loan scheme is intended to ease the financial burden of tertiary education and expand access for students who might otherwise struggle to meet the cost of schooling. Its administration requires coordination among NELFUND, beneficiaries and tertiary institutions to verify applications, confirm approved amounts and ensure that payments are properly recorded.
When students pay their fees before NELFUND’s disbursement reaches their institutions, duplicate payments can occur if they are not informed that the fund has already settled their bills. Such cases may require institutions to process refunds.
The tokenised arrangement is intended to address this communication gap by giving students a direct role in authorising institutional payments while restricting the destination of the funds.
Its effectiveness will depend on how efficiently NELFUND and participating institutions notify students, confirm payment status and reconcile transactions, particularly when schools impose deadlines for fee payments and registration.
Although the pilot has commenced, the officials did not provide a specific date for full implementation. The nearly 400,000 applications cited at the briefing refer to applications received and should not be taken as the number already processed through the pilot.
