As thousands of Nigerian students begin applying for the Nigerian Education Loan Fund (NELFUND), one key question keeps coming up: Is NELFUND a loan, or is it free financial support from the Federal Government? With rising tuition fees and economic hardship, understanding the difference could shape how families plan for higher education in 2025 and beyond.
What is NELFUND?
The Nigerian Education Loan Fund (NELFUND) is a Federal Government-backed scheme created to help students in tertiary institutions access financial aid. The program was signed into law in 2023 under the Student Loan Act and officially kicked off in 2024.
Unlike scholarships or bursaries, NELFUND provides interest-free loans, meaning students borrow money to pay their school fees and are expected to repay after graduation.
Loan or Free Grant? The Clear Answer
NELFUND is not free money. It is a loan scheme, designed to be repaid once beneficiaries complete their studies and secure employment.
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Repayment Timeline: Graduates are required to start repayment two years after NYSC.
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No Interest Charges: While it is a loan, it comes interest-free, making it different from traditional bank loans.
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Legal Backing: The Student Loan Act mandates repayment, making it legally binding.
This means students should not mistake it for grants or palliative-style support.
When Will Students Start Paying Back?
According to the Student Loan Act and NELFUND guidelines, repayment will not begin immediately after graduation. Instead:
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Repayment officially starts two years after a student secures employment or establishes a business.
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For salaried workers, deductions will be made directly from their monthly salary by their employer and remitted to the loan fund.
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For self-employed graduates, repayment will be tied to personal income tax filings with the Federal Inland Revenue Service (FIRS).
This flexible timeline is designed to prevent repayment pressure on fresh graduates who may still be job hunting.
How NELFUND Works in Practice
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Application: Students apply through their institutions, which verify and forward details to NELFUND.
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Disbursement: Funds are released directly to schools to cover tuition fees. In some cases, stipends for upkeep may also be included.
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Repayment: Deductions are made from graduates’ salaries once they begin earning. For self-employed graduates, repayment is structured through tax returns.
This structure is meant to ensure the sustainability of the program for future students.
Who Can Benefit?
According to NELFUND guidelines:
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Nigerian students in public tertiary institutions are eligible.
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Applicants must provide proof of admission, guarantor information, and meet specific criteria.
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Priority is often given to students from low-income backgrounds.
Why the Confusion?
The misconception that NELFUND is “free money” stems from the Federal Government’s promotion of the program as student support. However, unlike direct scholarships or grants, this fund is tied to repayment obligations.
Education analysts argue that the interest-free nature makes it easier to confuse with free aid. But policy documents make it clear: repayment is mandatory.
Expert View
Speaking on the scheme, Prof. Allen Agih, Vice-Chancellor of Niger Delta University, recently acknowledged NELFUND’s role in easing tuition burdens after receiving ₦238.9 million disbursement for students. He, however, emphasized the importance of students understanding the loan aspect, so they can prepare for repayment.
Financial experts also note that if managed transparently, NELFUND could reduce the dropout rate caused by high tuition while remaining sustainable through repayment cycles.
The Bigger Picture
NELFUND’s design reflects a global trend where governments provide student loan schemes instead of blanket scholarships. Countries like the UK, US, and Ghana all run similar programs. Nigeria’s version is unique in being interest-free, which makes it less burdensome in the long run.
Key Takeaway
NELFUND is a loan, not a grant. While it helps Nigerian students ease the pressure of rising school fees, beneficiaries should remember that repayment will be required after graduation.
As the program expands, transparency, efficient disbursement, and job creation will determine whether it becomes a lasting solution—or another abandoned policy
