Repayment of loans obtained from the Nigerian Education Loan Fund has been capped at 10 per cent of a beneficiary’s gross monthly income, with the arrangement designed to ensure that graduates do not face excessive financial pressure while repaying their education loans.

The provision is contained in the Students Loans (Access to Higher Education) Act, 2024, which established NELFUND as the Federal Government’s vehicle for providing loans to Nigerians for higher education, vocational training and skills acquisition.

Under the Act, beneficiaries are required to commence repayment after completing their course of study and securing employment.

However, the law provides a significant cushion for beneficiaries, stipulating that monthly repayment deductions shall not exceed 10 per cent of their gross income until the loan and applicable charges are fully repaid.

The legislation also provides that NELFUND shall not initiate enforcement action against a beneficiary until two years after completion of the National Youth Service Corps, NYSC, programme or exemption from it.

A beneficiary who remains unemployed or is not receiving any income may also seek an extension from the Fund by providing a sworn statement in the manner prescribed by NELFUND.

The repayment framework is coming as the student loan scheme continues to expand, with NELFUND disclosing that it had processed 1,635,676 applications and recorded approximately 850,000 unique beneficiaries as of July 3, 2026.

The Fund has so far disbursed a total of N303.9 billion to beneficiaries. Of the amount, N190 billion has been disbursed to cover institutional charges, while N113.8 billion has been paid as upkeep support to eligible students.

The distinction between applications processed and unique beneficiaries is significant, as NELFUND explained that some students have had more than one application processed.

The approximately 850,000 unique beneficiaries therefore represent the number of individual students who have benefited from the scheme, rather than the total number of applications handled by the Fund.

The repayment mechanism established by the 2024 Act is central to the sustainability of the programme because NELFUND is expected to recover loans granted to beneficiaries and use its resources to continue financing future applicants. The law provides that the Fund shall establish and maintain a diversified pool of funds for the provision of loans to qualified applicants and ensure recovery of debts due to it.

NELFUND is also empowered to recover loans through legal means, including debt recovery actions. However, the Act places conditions around enforcement, giving beneficiaries time to transition from education to employment before repayment enforcement can begin. The legislation further provides that every prospective employer has a duty to enquire from NELFUND about the student-loan status of persons they employ.

Where an employer is informed that an employee is a beneficiary who has not completed repayment, the employer is required to provide information that NELFUND may require to initiate collection of the loan and applicable charges.

The law prescribes sanctions for employers who contravene the provision, including a fine of at least N2 million, imprisonment for a term of at least one year, or both.

The repayment structure means that graduates with higher incomes would make larger monthly repayments, while those earning less would make proportionately smaller payments. For example, a graduate earning a gross monthly income of N200,000 would have a maximum monthly repayment obligation of N20,000 under the 10 per cent ceiling, while a beneficiary earning N500,000 gross monthly income would have a maximum repayment tied to that same ceiling.

The law, however, does not make repayment conditional on a fixed monthly amount. Rather, the maximum deduction is linked to the beneficiary’s income. The law, however, makes provision for sanctions against anyone who submits a false statement to the Fund, with conviction attracting imprisonment for up to three years.

The student-loan scheme’s repayment provisions are part of a broader financing architecture under which NELFUND is expected to operate as a revolving education financing institution rather than as a conventional government grant programme.

Under the Act, the Fund’s General Reserve Fund is expected to receive, among other sources, one per cent of taxes, levies and duties collected by the Federal Inland Revenue Service accruing to the Federal Government, appropriations by the National Assembly, loan repayments, investment income, government funding, proceeds from education bonds and other debt instruments, donations, grants and endowments.

The Fund is authorised to charge the General Reserve Fund with amounts payable as loans to qualified applicants for tuition, fees, charges and upkeep, as well as approved operational expenses.

The Act further requires the Fund to keep proper accounts and records, with its accounts to be audited annually by an independent firm of auditors.

NELFUND is also required to publish its annual report within six months after the end of each financial year and submit its audited accounts to the President and the National Assembly.

The growing size of the scheme means the effectiveness of the repayment system could become increasingly important to the future of higher education financing in Nigeria.

With approximately 850,000 beneficiaries already recorded and N303.9 billion disbursed, the Fund’s future capacity to support additional students will depend partly on the availability of fresh funding and, over time, the recovery of loans from beneficiaries who have graduated and entered employment.

The 2024 Act therefore attempts to strike a balance between access and recovery, giving students access to financing when they need it while ensuring that repayment does not become an immediate or excessive burden after graduation.

For beneficiaries, the 10 per cent ceiling provides a statutory limit on how much of their gross monthly income can be deducted. For NELFUND, however, the challenge will be to establish an efficient recovery system capable of tracking beneficiaries after graduation, identifying those who have secured employment, collecting repayments and recycling recovered funds into new student loans.