Nigeria’s education financing landscape took a major turn in 2025 as the Nigerian Education Loan Fund (NELFUND) clarified important repayment provisions for students benefiting from the federal government’s interest-free student loan programme. The announcement, delivered by NELFUND’s Managing Director, Mr. Akintunde Sawyerr, provides much-needed clarity to beneficiaries nationwide on when and how they will repay government-backed education loans — a topic that has drawn intense public interest and debate.
Understanding NELFUND: A New Era for Student Financing in Nigeria
The Nigerian Education Loan Fund was established to help qualified Nigerian students overcome financial barriers to tertiary education. Signed into law in 2024, NELFUND was designed to provide interest-free loans for tuition, fees and upkeep allowances to students attending accredited public institutions across Nigeria.
By early 2025, the fund had already disbursed billions of naira in financial support, benefiting tens of thousands of students and marking a historic step toward inclusive education financing.
New Repayment Policy Revealed: Two-Year Grace After NYSC
In a televised interview discussing the programme’s progress, Mr. Akintunde Sawyerr confirmed a major update to the student loan repayment policy:
Students are not required to begin loan repayment until two years after completing the National Youth Service Corps (NYSC). This “grace period” is intended to give graduates adequate time to find employment before repayment obligations kick in.
This repayment model recognizes the challenges many fresh graduates face in securing jobs immediately after NYSC — a reality in Nigeria’s competitive labour market. By delaying repayment, the government aims to reduce early financial pressure on young professionals.
Employer-Led Salary Deductions: How Repayments Work
One of the most notable features of the repayment structure is that the responsibility for deductions lies with the employer:
- Once a beneficiary secures employment, their employer is expected to identify the NELFUND loan status via a central database.
- Employers will then deduct 10% of the employee’s monthly salary and remit it directly to NELFUND as repayment.
This employer-centric model aims to simplify loan recovery and reduce administrative burden on graduates. It is a similar approach to payroll deductions used in formal loan and pension systems, strengthening compliance while protecting borrowers from direct repayment stress.
For individuals who are self-employed or working outside a formal employer-employee setting, loan repayment will be their responsibility, meaning they must make arrangements to pay directly to NELFUND once the two-year post-NYSC period has passed.
Importantly, graduates who remain unemployed after NYSC are not obligated to start repayment until they secure a job, reinforcing the policy’s adaptive design based on real-world economic conditions.
Who Is Eligible for NELFUND Loans and What Has Been Disbursed So Far?
As of early 2025:
- NELFUND had provided significant financial support to students in public universities and colleges, paying institutional fees and upkeep stipends totaling millions of naira.
- The programme targets students pursuing first-degree programmes, with plans to expand in future phases.
- Students received monthly stipends, often used to cover living expenses, university service charges and related costs — a major relief for many families.
However, loans are currently not available to students in private institutions due to existing legislative provisions, though the president has indicated possible future policy shifts to extend coverage.
Why This Matters: Impact on Students and Nigeria’s Future Workforce
These repayment rules are significant for several reasons:
- Encourages access to education: The grace period and employer deduction approach reduce anxiety about repayment, encouraging more students to pursue higher education without fear of immediate debt.
- Aligns with employment realities: By linking repayment to formal employment, the policy reflects the employment landscape in Nigeria, where job opportunities often come months or years after graduation.
- Supports socioeconomic mobility: Students from financially disadvantaged backgrounds now have a clearer pathway to graduate education and future contribution to the economy.
Financial experts see this model as a major step — though many emphasise the need for robust job creation and tracking systems to ensure repayments remain manageable and fair.
Public Reception and Ongoing Conversations
Public reactions to the repayment plan have been mixed. Many students and families welcome the delayed repayment structure as a practical solution that eases immediate financial pressure. Others, particularly in regions where loan uptake has been slower, call for expanded awareness campaigns and transparent disbursement tracking to ensure equitable access nationwide.
There are also broader discussions about ensuring transparency, especially in how funds are disbursed and the quality of data linking employment records to loan records for accurate repayment deductions. Analysts argue that successful implementation could strengthen public confidence in government education financing.
