BREAKING: NELFUND Introduces Token System for School Fees

The Nigerian Education Loan Fund (NELFUND) has begun piloting a token-based payment system that will allow students to authorise the payment of their school fees directly to their institutions, in a move aimed at preventing duplicate payments and reducing difficulties associated with refunds.

The fund’s Managing Director, Akintunde Sawyerr, disclosed this during a press briefing on Wednesday.

He said the new arrangement would give beneficiaries greater control over when their approved tuition fees are paid while ensuring that the money cannot be diverted to personal bank accounts or transferred to other institutions.

NELFUND Executive Director of Operations, Mustapha Iyal, also confirmed that the pilot phase had commenced.

He disclosed that the fund had received close to 400,000 applications at the time of the briefing.

Under the proposed arrangement, students will be notified when their approved tuition funds are ready for payment.

They will then use an application on their mobile phones to authorise the transaction through a digital token linked to their respective institutions.

Rather than allowing the funds to move through students’ personal bank accounts, the system will restrict the transaction to the institution for which the loan was approved.

This is expected to reduce confusion over fee payments and prevent situations in which students unknowingly pay charges that NELFUND has already settled.

Sawyerr explained that the decision followed difficulties experienced by some beneficiaries who paid their fees without knowing that the fund had already transferred the money to their schools.

“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.

The NELFUND chief explained that the problem often arose because students had to meet registration deadlines while waiting for confirmation of their loan payments.

In some cases, the institution had received the money, but the beneficiary was unaware of the transaction and proceeded to pay independently.

He illustrated the situation with an example of a school receiving payment from NELFUND on Monday, while a student who had not received any notification paid the same fees on Wednesday.

By Friday, the student might discover that the fund had already settled the bill, leaving the institution with two payments for the same obligation.

“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.

According to Sawyerr, such cases create additional administrative work for institutions and leave students waiting for refunds of money they may have borrowed or raised to meet their academic obligations.

He said the new arrangement was designed to address the problem by allowing students to initiate payments themselves, with the transaction going directly to their designated schools.

“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 stressed that the system would not give beneficiaries unrestricted access to the money.

Instead, students would have the authority to trigger payments without being able to withdraw the funds or redirect them elsewhere.

“We’re not giving the students money, but we’re giving them power,” he said.

Responding to questions about whether beneficiaries could transfer the money to their personal accounts after it became available through the digital arrangement, Sawyerr said the token would carry restrictions that prevent such transactions.

“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 tuition payment of N200,000, for instance, would only be able to authorise the payment to the institution designated for the loan.

The funds would remain unused until the student initiated the transaction.

“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.

Iyal reinforced the explanation, clarifying that the token should not be understood as a conventional electronic wallet or mobile money account.

“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said.

He explained that each token would be connected to a specific institution, ensuring that the approved funds could only be used to pay the school concerned.

The restriction is intended to preserve the purpose of the loan and strengthen accountability in the disbursement process.

Although the pilot has commenced, the officials did not announce a specific date for the system’s full implementation or identify the institutions participating in the initial phase during the briefing.

The close to 400,000 applications cited by Iyal also represents the figure disclosed at the time of the briefing.

It does not establish that all the applications have been processed under the new payment arrangement.

The development comes as NELFUND continues to manage the growing demand for the Federal Government’s student loan programme.

Established under the Students Loans (Access to Higher Education) Act, 2024, the fund provides eligible Nigerian students with access to loans for approved institutional charges and, where applicable, upkeep allowances.

The scheme is intended to help students remain in tertiary education despite financial difficulties and reduce the pressure on families struggling to meet the rising cost of education.

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