The Nigerian Education Loan Fund (NELFUND) has launched a pilot of a token-based payment system aimed at preventing students from paying their school fees twice and reducing complications associated with refunds.
The initiative comes as the fund has received nearly 400,000 applications under the ongoing process.
NELFUND Managing Director, Akintunde Sawyerr, disclosed this on Wednesday during a press briefing, explaining that the proposed system would allow beneficiaries to authorise payments directly to their institutions using tokens linked to their respective schools.
Under the arrangement, students would receive notifications when their approved institutional fees were ready for payment and could initiate transactions through an application on their mobile phones. The funds would then be transferred directly to the designated institution rather than being paid into the students’ personal bank accounts.
Sawyerr said the initiative was developed to address cases where students unknowingly paid fees that NELFUND had already settled on their behalf.
“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.
He explained that communication delays sometimes left beneficiaries unaware of completed transactions, prompting them to pay their fees independently to meet institutional deadlines. When they subsequently discovered that NELFUND had already made the payment, they had to seek refunds.
Using a hypothetical example, Sawyerr described a situation where the fund paid a student’s institution on Monday, but the beneficiary, unaware of the transaction, paid the same fees by Wednesday before learning of the earlier payment on Friday.
“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.
To prevent such occurrences, the managing director said the new arrangement would allow students to control when approved payments were initiated while ensuring the money reached the correct institution.
“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 clarified that the system would not involve handing cash to beneficiaries but would instead give them authority to initiate transactions within strict limits.
“We’re not giving the students money, but we’re giving them power,” he said.
According to Sawyerr, the tokenised mechanism would prevent students from withdrawing the approved funds into their personal accounts or redirecting them to institutions other than those designated for payment.
Responding to questions about whether beneficiaries could move the money into their personal accounts after receiving it in a wallet, he said the system would restrict each transaction 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.
Sawyerr illustrated the restriction with a student whose approved fees amounted to N200,000, explaining that the beneficiary could authorise payment only 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.
NELFUND Executive Director, Mustapha Iyal, further explained that the token would be tied to a specific institution and would not function as a personal or mobile money wallet.
“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said, explaining that each token would be attached to a particular institution and could only be used to direct payments to that school.
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Iyal confirmed that the pilot was already underway, with applications approaching 400,000 at the time of the briefing.
“As I speak to you, we already have close to 400,000 applications,” he said.
He reiterated that linking the tokens to individual institutions would prevent beneficiaries from diverting the funds to their personal accounts or other schools.
NELFUND operates the Federal Government’s student loan programme established under the Students Loans (Access to Higher Education) Act, 2024. The scheme provides eligible Nigerian students with interest-free loans to cover institutional charges and approved upkeep expenses where requested.
Under the existing arrangement outlined on NELFUND’s official website, tuition and other approved institutional charges are paid directly to schools, while upkeep allowances are transferred to beneficiaries’ bank accounts.
The proposed tokenised system specifically targets institutional fee payments and does not change the existing arrangement for upkeep allowances.
The student loan programme is designed to reduce the financial barriers to tertiary education and help more Nigerians access higher learning. Its implementation, however, requires effective coordination among the fund, beneficiaries and educational institutions to ensure accurate verification, approval and recording of payments.
NELFUND’s payment guidelines and institutional verification procedures are intended to support this process. However, when students pay their fees before the fund’s disbursement is reflected by their institutions, the subsequent arrival of the loan money can create refund complications.
The token-based pilot is intended to address this challenge by enabling students to initiate approved payments themselves while ensuring that the funds can only reach the designated institutions.
Although the officials confirmed that the pilot had commenced, they did not announce a specific date for its full implementation.
They also did not clarify how many of the nearly 400,000 applications had been processed through the pilot, meaning the figure should not be taken as the number of beneficiaries already using the new system.
Its success will depend on how effectively NELFUND, students and institutions coordinate payment authorisation, confirmation and record-keeping, particularly where schools impose strict deadlines for fee payments and registration.