The Nigerian Education Loan Fund (NELFUND) has commenced a pilot scheme for a tokenised payment system aimed at preventing students from paying their school fees twice and eliminating complications associated with refunds.
The fund’s Managing Director, Akintunde Sawyerr, disclosed this on Wednesday during a press briefing, revealing that nearly 400,000 applications had been received under the ongoing process.
Sawyerr explained that the proposed system would allow students to authorise the payment of their approved institutional fees directly to their schools through tokens linked to the respective institutions.
Under the arrangement, beneficiaries would use a mobile application to initiate payments from their approved loan funds, instead of receiving institutional fee payments in their personal bank accounts.
He said the initiative was designed to address cases where students paid their fees independently because they were unaware that NELFUND had already transferred the money to their institutions.
According to him, delays in communicating completed payments to beneficiaries had resulted in some students making duplicate payments, subsequently creating the need for refunds.
“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.
Sawyerr illustrated the problem with a situation in which the fund paid a student’s institution on Monday, but the student, unaware of the transaction, paid the same fees by Wednesday before discovering on Friday that NELFUND had already settled the bill.
“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.
The managing director said the new mechanism would eliminate such situations by giving students the power to initiate payments while ensuring that the funds were transferred directly to their designated institutions.
“We want to eliminate that need for refunds. So we’re placing the power of payment in the hands of the students,” he said.
He explained that beneficiaries would receive notifications when their approved fees were ready for payment and could then authorise the transactions using their mobile phones.
Once authorised, the payment would go directly to the institution’s designated account, reducing the likelihood of duplicate payments.
Sawyerr stressed that the arrangement was not a cash-disbursement system but a mechanism that gives students control over payment initiation while restricting the use of the funds.
“We’re not giving the students money, but we’re giving them power,” he said.
He added that beneficiaries would be unable to transfer the funds to their personal bank accounts or redirect them to other institutions.
Responding to questions about whether students could move the money to their personal accounts through a wallet, Sawyerr said the tokenised system would restrict each payment to the institution for which it had been approved.
“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 institutional fee payment of ₦200,000, for instance, would only be able to authorise the transfer to the designated school’s account.
“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.
The fund’s Executive Director, Mustapha Iyal, also clarified that the token would be linked to a specific institution rather than a personal or mobile money wallet.
“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said, adding that the token could only be used to direct payments to the institution to which it was attached.
Iyal confirmed that the pilot phase had commenced, with close to 400,000 applications received as of the briefing.
“As I speak to you, we already have close to 400,000 applications,” he said.
He reiterated that the institution-linked arrangement was designed to prevent beneficiaries from redirecting approved funds to other schools or personal accounts.
NELFUND administers the federal government’s student loan scheme established under the Students Loans (Access to Higher Education) Act, 2024. The programme provides eligible Nigerian students with interest-free loans to cover institutional charges and, where requested and approved, upkeep expenses.
Under the existing arrangement, approved institutional charges are paid directly to students’ institutions, while upkeep allowances are transferred to beneficiaries’ bank accounts.
The proposed tokenised system focuses on institutional fee payments and does not, based on the officials’ explanations, replace the existing arrangement for paying approved upkeep allowances.
The student loan scheme is intended to ease the financial burden of tertiary education and expand access for Nigerians who may struggle to meet the cost of schooling.
However, the payment process involves coordination among NELFUND, beneficiaries and tertiary institutions to ensure that applications are verified, approved amounts are accurate and transactions are properly recorded.
Sawyerr’s explanation indicates that delays in communicating completed payments have created administrative challenges, particularly when students pay independently to meet school registration or fee deadlines without knowing that NELFUND has already settled their bills.
The tokenised payment system is expected to address this gap by allowing students to authorise transactions while restricting the funds to their designated institutions.
Although the officials confirmed that the pilot had commenced, they did not announce a specific date for full implementation during the briefing.
The nearly 400,000 applications cited by Iyal should also not be taken to mean that the same number of applications has already been processed through the pilot, as the officials did not clarify how many had entered that stage.
The effectiveness of the new system will depend on how efficiently NELFUND, students and tertiary institutions coordinate payment authorisation, confirmation and record-keeping, particularly where schools impose strict deadlines for fee payments and registration.