The Nigerian Education Loan Fund (NELFUND) has commenced a pilot of a tokenised payment system aimed at preventing students from paying their school fees twice and eliminating refund complications.
The fund’s Managing Director, Akintunde Sawyerr, disclosed this on Wednesday during a press briefing, adding that nearly 400,000 applications had been received under the ongoing process.
Sawyerr said the proposed system would allow students to initiate payments directly to their institutions through tokens linked to their respective schools, rather than receiving institutional loan funds in their personal bank accounts.
He explained that the initiative was designed to address cases in which students paid their fees without knowing that NELFUND had already transferred the money to their institutions.
“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.
According to him, the problem occurs when NELFUND pays an institution but a student, unaware of the transaction, independently pays the same fees to meet the school’s deadline.
Sawyerr illustrated the situation with an example of NELFUND paying an institution on Monday, while a student who was unaware of the transaction paid the same fees by Wednesday and only learnt of the earlier payment on Friday.
“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.
He said the new payment mechanism would eliminate such situations by allowing students to authorise payments themselves, with the funds transferred directly to their institutions.
“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 explained that students would receive notifications when their approved fees were ready for payment and could authorise the transactions through their phones.
Sawyerr stressed that the arrangement was not a cash-disbursement system but a mechanism that would give students control over payment initiation while restricting how the funds could be used.
“We’re not giving the students money, but we’re giving them power,” he said.
He added that the system would prevent beneficiaries from transferring the funds to their personal accounts or redirecting them to other institutions.
Responding to questions about whether students could transfer the money to personal accounts after receiving it in a wallet, Sawyerr said the tokenised system would restrict payments to the institution for which the funds 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 payment of N200,000, for instance, could authorise the transfer only to the designated institution’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.
NELFUND’s Executive Director, Mustapha Iyal, said 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 each token could only be used to direct payments to the designated institution.
He confirmed that the pilot phase had commenced, with nearly 400,000 applications received at the time of the briefing.
Iyal said the institution-linked arrangement was designed to ensure that the funds could not be redirected to another school or a student’s personal account.
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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 paid into beneficiaries’ bank accounts.
The proposed tokenised system concerns the payment of institutional charges, rather than the regular disbursement of upkeep allowances.
The loan scheme is intended to ease the financial burden of tertiary education and improve access for students who might otherwise struggle to meet the cost of schooling.
However, the payment process requires coordination among NELFUND, beneficiaries and tertiary institutions to ensure that applications are verified, approved amounts are accurate and payments are properly recorded.
Sawyerr’s explanation suggests that delays in communicating completed payments have created administrative challenges, with some students unaware that their fees have already been settled by the fund.
Although Iyal confirmed that the pilot had commenced, the officials did not provide a specific date for full implementation during the briefing.
The nearly 400,000 applications cited by Iyal should not be interpreted as the number already processed through the pilot, as the briefing did not establish that distinction.
The effectiveness of the new arrangement will depend on how smoothly students, institutions and NELFUND coordinate payment authorisation, confirmation and records, particularly where schools impose deadlines for fee payments and registration.
