By Joseph Erunke, ABUJA Repayment of loans obtained from the Nigerian Education Loan Fund, NELFUND, has been capped at 10 per cent of a beneficiary’s gross monthly income, with the arrangement designed to ensure that graduates do not face excessive financial pressure while repaying their education loans. The provision is contained in the Students Loans (Access to Higher Education) Act, 2024, which established NELFUND as the Federal Government’s vehicle for providing loans to Nigerians for higher education, vocational training and skills acquisition. Under the Act, beneficiaries are required to commence repayment after completing their course of study and securing employment. However, the law provides a significant cushion for beneficiaries, stipulating that monthly repayment deductions shall not exceed 10 per cent of their gross income until the loan and applicable charges are fully repaid. The legislation also provides that NELFUND shall not initiate enforcement action against a beneficiary until two years after completion of the National Youth Service Corps, NYSC, programme or exemption from it. Room for extension A beneficiary who remains unemployed or is not receiving any income may also seek an extension from the Fund by providing a sworn statement in the manner prescribed by NELFUND. The repayment framework is coming as the student loan scheme continues to expand, with NELFUND disclosing that it had processed 1,635,676 applications and recorded approximately 850,000 unique beneficiaries as of July 3, 2026. The Fund has so far disbursed a total of N303.9 billion to beneficiaries. Of the amount, N190 billion has been disbursed to cover institutional charges, while N113.8 billion has been paid as upkeep support to eligible students. The figures highlight the growing scale of the Federal Government’s student financing programme and the huge financial commitment required to sustain it. The distinction between applications processed and unique beneficiaries is significant, as NELFUND explained that some students have had more than one application processed. The approximately 850,000 unique beneficiaries therefore represent the number of individual students who have benefited from the scheme, rather than the total number of applications handled by the Fund. The repayment mechanism established by the 2024 Act is central to the sustainability of the programme because NELFUND is expected to recover loans granted to beneficiaries and use its resources to continue financing future applicants. The law provides that the Fund shall establish and maintain a diversified pool of funds for the provision of loans to qualified applicants and ensure recovery of debts due to it. NELFUND is also empowered to recover loans through legal means, including debt recovery actions. However, the Act places conditions around enforcement, giving beneficiaries time to transition from education to employment before repayment enforcement can begin. Employer’s duty The legislation further provides that every prospective employer has a duty to enquire from NELFUND about the student-loan status of persons they employ. Where an employer is informed that an employee is a beneficiary who has not completed repayment, the employer is required to provide information that NELFUND may require to initiate collection of the loan and applicable charges. The law prescribes sanctions for employers who contravene the provision, including a fine of at least ₦2 million, imprisonment for a term of at least one year, or both. The repayment structure means that graduates with higher incomes would make larger monthly repayments, while those earning less would make proportionately smaller payments. For example, a graduate earning a gross monthly income of N200,000 would have a maximum monthly repayment obligation of N20,000 under the 10 per cent ceiling, while a beneficiary earning N500,000 gross monthly income would have a maximum repayment The law, however, does not make repayment conditional on a fixed monthly amount. Rather, the maximum deduction is linked to the beneficiary’s income. NELFUND’s repayment obligations also begin only after the beneficiary has graduated and secured employment, with the Act providing that a beneficiary may voluntarily commence repayment before completing the course. The legislation further provides protection for beneficiaries who are unable to secure employment. Where a beneficiary is unemployed and has no income, the person may seek an extension from NELFUND by providing a sworn statement in the manner determined by the Board. Sanctions The law, however, makes provision for sanctions against anyone who submits a false statement to the Fund, with conviction attracting imprisonment for up to three years. The student-loan
Don't miss out on breaking stories and in-depth articles.
