The Nigerian Education Loan Fund (NELFUND) has commenced the pilot phase of a tokenised payment system designed to prevent double payment of school fees by students and eliminate refund-related issues, with close to 400,000 applications already received in the ongoing exercise.
NELFUND Managing Director, Akintunde Sawyerr, disclosed this on Wednesday at a press briefing, where he explained that the new arrangement would let students initiate payments directly to their institutions through tokens linked to their schools.
Under the proposed system, students would authorise payments directly to their institutions from their approved loan funds via a mobile application, instead of having the funds disbursed into their personal bank accounts.
Sawyerr said the change was intended to address situations in which students paid their fees without knowing that NELFUND had already transferred the money to their institutions.
He explained that delays in notifying students about payments made by the fund had resulted in some beneficiaries making duplicate payments, 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.
According to him, the problem arises when the fund pays an institution but the student, unaware of the transaction, also pays to meet the school’s deadline.
Sawyerr illustrated the situation with an example in which NELFUND paid an institution on Monday, but a student who did not know about the payment paid the same fees by Wednesday and only learnt of the fund’s earlier transaction on Friday.
“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.
The managing director said the new payment mechanism was intended to eliminate such situations by allowing students to initiate payments themselves and have the transactions reflected directly in their institutions’ accounts.
“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 then authorise the transaction through their phones.
Once a student initiates the payment, the money would move directly to the designated institution, reducing the possibility of students paying fees already covered by NELFUND.
Sawyerr stressed that the arrangement was not a cash-disbursement system but a mechanism designed to give students control over the initiation of payments while restricting how the funds could be used.
“We’re not giving the students money, but we’re giving them power,” he said.
The system would also prevent beneficiaries from transferring the money to their personal bank accounts or redirecting it to other institutions, he added.
Responding to questions from journalists about whether students could transfer the funds to their personal accounts after receiving them in a wallet, Sawyerr said the tokenised system would restrict the funds to the institution for which the payment 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, for instance, a student whose approved payment was N200,000 would be able to authorise the transfer 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.
The fund’s Executive Director, Mustapha Iyal, also explained that the token was 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, explaining that each token would be attached to a particular institution and could only be used to direct payments to that school.
Iyal confirmed that the pilot phase had commenced, with close to 400,000 applications received at the time of the briefing.
“As I speak to you, we already have close to 400,000 applications,” he said.
He added that the institution-linked arrangement was designed to ensure that the money could not be redirected to another school or a student’s personal account.
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 access to interest-free loans to cover institutional charges and, where requested and approved, upkeep expenses.
Under the existing arrangement described on NELFUND’s official website, approved institutional charges are paid directly to students’ institutions, while upkeep allowances are paid into the students’ bank accounts.
The distinction is important because the proposed tokenised system concerns the payment of institutional charges, not the ordinary transfer of upkeep allowances to students.
