NELFUND clarifies what happens when graduates fail to repay student loans

The Nigerian Education Loan Fund (NELFUND) has dismissed a viral report claiming that students who fail to repay their education loans after graduation could be sentenced to life imprisonment.

NELFUND described the report as fake news in a post shared on its official X account on Sunday.

The Fund also shared an image of the newspaper front page circulating online and stamped it “FAKE”, making it clear that the publication did not come from the government.

The fake publication, dated Thursday, May 27, 2027, carried a headline claiming that President Bola Tinubu had ordered that students who fail to repay their education loans after graduation should be jailed for life.

NELFUND said there is no new law or policy introducing life imprisonment for beneficiaries who fail to repay their student loans.

Under the existing student loan system, beneficiaries are not required to start repaying their loans immediately after graduation.

Repayment is expected to begin two years after a beneficiary completes the National Youth Service Corps (NYSC), provided the graduate has secured employment.

NELFUND Managing Director, Akintunde Sawyerr, had earlier explained that the two-year period is meant to give graduates enough time to find jobs and become financially stable.

For beneficiaries who are employed, repayment is made through deductions from their salaries. Employers are required to deduct 10 per cent of the beneficiary’s salary and pay it to NELFUND.

Self-employed beneficiaries are expected to make their repayments directly.

However, graduates who remain unemployed after the two-year period are not expected to start making repayments until they secure employment or begin earning an income. NELFUND has also stated that unemployed beneficiaries may apply for an extension under the relevant process.

This means graduates are not expected to begin repaying their loans immediately after leaving school, contrary to the claim in the viral publication.

NELFUND was established under the revised Student Loan Act signed into law by President Tinubu in April 2024. The law replaced the 2023 legislation and provided the framework for government-backed loans for students in higher education and vocational training institutions.

The student loan application portal opened on May 24, 2024. The scheme initially focused on students in federal tertiary institutions before being expanded to students in state-owned institutions.

The programme has continued to grow since its launch.

NELFUND said in its Student Loan Disbursement Status Report generated on September 3, 2026, that it had processed 1,659,853 applications.

The latest figures show that total disbursements have reached N355.87 billion.

Of this amount, N192.89 billion was paid to 319 beneficiary institutions as institutional fees, while N162.98 billion was given directly to students as upkeep allowances.

NELFUND’s clarification is aimed at stopping the spread of false information about the student loan programme, particularly claims concerning repayment conditions and penalties for beneficiaries.

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