The Academic Staff Union of Universities (ASUU) has criticized the Nigerian Education Loan Fund (NELFUND) scheme, arguing that government grants to universities are more effective than student loans. Learn what ASUU said, why it matters, and how it affects higher education in Nigeria.
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ASUU Faults NELFUND Student Loan Scheme, Says Grants Are Better
In a strong critique of the Federal Government’s new education funding model, the Academic Staff Union of Universities (ASUU) has faulted the Nigerian Education Loan Fund (NELFUND) scheme, saying that university grants remain the most sustainable and fair way to fund higher education.
According to reports from Nairametrics (October 10, 2025), ASUU’s President, Professor Chris Piwuna, made this position clear during a national briefing where he analyzed the shortcomings of the current student loan policy.
Piwuna argued that Nigeria’s student loan policy could deepen inequality rather than solve it, as it transfers the financial burden of education from the state to already struggling students and parents.
“Education is not a business; it’s a social investment. We cannot turn our students into debtors before they graduate,” he said.
What Is the NELFUND Scheme?
The Nigerian Education Loan Fund (NELFUND) was introduced by the Federal Government in 2024 to provide interest-free student loans for indigent students in tertiary institutions.
The policy aimed to enhance access to higher education and reduce the dropout rate caused by rising tuition and living costs. However, despite its promises, ASUU believes the implementation has serious structural flaws that could harm students in the long run.
Low Uptake: Students Show Little Interest in NELFUND
One of ASUU’s biggest arguments against the NELFUND scheme is its low application rate.
Out of over 2 million eligible students in Nigerian universities and polytechnics, fewer than 400,000 have applied for the loan. This low uptake reflects widespread distrust, fear of indebtedness, and limited awareness.
ASUU interprets this as a sign that students do not view loans as a sustainable or desirable option, especially in a country where unemployment rates remain high among graduates.
“When graduates cannot find jobs for years, how do you expect them to repay loans?” Piwuna asked rhetorically.
💰 ASUU’s Alternative: University Grants Over Loans
The Academic Staff Union of Universities insists that educational grants, not loans, remain the best strategy for ensuring fairness and access to quality education.
Grants, unlike loans, do not require repayment — meaning they relieve poor students of future debt while encouraging academic focus and innovation.
ASUU believes that the government should fund universities directly through grants that would:
- Support infrastructure development and research.
- Subsidize tuition fees for students.
- Ensure equal access to education regardless of social class.
- Maintain the principle that education is a public good, not a commercial service.
Tuition Fees and Need for Harmonization
ASUU also criticized the disparities in tuition fees across Nigerian universities, warning that the lack of regulation could worsen inequality.
Prof. Piwuna noted that medical students at one federal university pay ₦125,000, while others pay as high as ₦400,000 for the same program.
He called on the Federal Ministry of Education to harmonize tuition fees nationwide, ensuring consistency and fairness across disciplines and institutions.
“We now have a system where two students studying the same course in two federal universities pay fees that differ by 300%. That is unacceptable.”
Why ASUU Declined Membership in NELFUND Board
Interestingly, ASUU confirmed that it declined an invitation to join the NELFUND Governing Board.
According to Prof. Piwuna, ASUU wanted to maintain its independence and avoid any conflict of interest in the implementation of a policy it fundamentally disagrees with.
However, he added that the union still wishes NELFUND success if it can genuinely assist students without exploiting them.
Loans vs Grants: Comparative Analysis
| Criteria | Student Loans (NELFUND) | University Grants (ASUU’s Proposal) |
|---|---|---|
| Funding Nature | Borrowed funds to be repaid | Direct aid; no repayment required |
| Beneficiary Risk | High — debt and repayment pressure | Low — financial relief for students |
| Equity | Limited access; not all qualify | Universal or needs-based |
| Sustainability | Risky due to unemployment & defaults | Depends on government fiscal strength |
| Implementation Complexity | Requires repayment monitoring | Simple disbursement via institutions |
| Psychological Impact | Anxiety, fear of debt | Motivation and inclusivity |
ASUU argues that education should never come with a debt burden, especially in a country still battling high youth unemployment and unstable economic conditions.
Potential Risks of the Student Loan Scheme
ASUU highlighted several risks if the NELFUND system continues without reform:
- Student Debt Crisis:
Graduates might start their careers already in debt, affecting their financial stability and productivity. - Increased Dropout Rates:
Fear of indebtedness may discourage poor students from enrolling in tertiary institutions. - Unemployment Burden:
With job scarcity, most graduates might default, undermining the financial sustainability of NELFUND. - Institutional Inequality:
Richer universities may continue to raise fees, further disadvantaging students from poor backgrounds. - Administrative Corruption:
Mismanagement of loan disbursement or bias in approval could erode public trust in the scheme.
ASUU’s Broader Argument: Education Is a Public Good
At the heart of ASUU’s argument is a philosophical and policy stance: education is a right, not a privilege.
The union insists that funding tertiary education should remain the responsibility of the government, not of students through loans.
ASUU further believes that education investment is the foundation for national development, and therefore cannot be subjected to market forces or profit motives.
“When education becomes a commercial service, inequality becomes institutionalized,” Piwuna warned.
Policy Recommendations by ASUU
ASUU offered several policy recommendations to reform Nigeria’s education funding system:
- Adopt a Mixed Funding Model:
Combine grants with minimal, interest-free loans only for non-academic expenses. - Increase Federal Budget for Education:
Raise allocation to at least 25% of national expenditure, as recommended by UNESCO. - Introduce National Tuition Regulation Framework:
Harmonize tuition across universities to prevent excessive fee hikes. - Expand Scholarship and Bursary Programs:
Create merit- and need-based scholarships for indigent students. - Reform University Autonomy Laws:
Allow institutions to manage funds efficiently while maintaining affordability.
🏛️ Government’s Response and Public Reaction
While the Federal Government insists that NELFUND is interest-free and beneficial, many students and parents remain skeptical.
Social media reactions show mixed feelings — some praise the effort to expand access, while others echo ASUU’s fear that it could trap young Nigerians in lifelong debt.
Some universities have begun sensitization campaigns, but others still struggle with student mistrust of the program.
Implications for the Future of Education in Nigeria
ASUU’s criticism highlights deeper issues in Nigeria’s higher education system — underfunding, rising tuition, and poor infrastructure.
The loan-versus-grant debate is not just about money; it’s about the philosophy of education — whether the government sees education as a social service or a private investment.
A long-term solution will require a balanced approach, ensuring sustainable funding without excluding the poor.
Conclusion: Rethinking Nigeria’s Education Funding System
The ongoing ASUU vs NELFUND debate has reignited conversations about equity, access, and the true purpose of higher education in Nigeria.
While student loans can play a role in bridging financial gaps, grants remain the gold standard for ensuring that no student is left behind due to poverty.
For education to fulfill its role as a national equalizer, the government must prioritize public funding, transparency, and accountability — not debt dependency.
As ASUU rightly puts it, “A nation that makes its students debtors mortgages its future.”
