The Nigerian Education Loan Fund (NELFUND) has begun piloting a tokenised payment system designed to prevent students from paying their school fees twice and reduce complications associated with refunds.
NELFUND Managing Director, Akintunde Sawyerr, disclosed this on Wednesday during a press briefing, saying the new system would allow students to authorise payments directly to their institutions using tokens linked to their respective schools.
The announcement comes as the student loan scheme continues to attract applications, with the fund’s Executive Director, Mustapha Iyal, confirming that nearly 400,000 applications had been received.
Under the proposed arrangement, students would use an application on their phones to authorise payments from their approved loan funds to their institutions instead of receiving the money in their personal bank accounts.
Why NELFUND Is Changing Its Payment System
Sawyerr said the new arrangement was designed to address cases in which students paid their fees without knowing that NELFUND had already transferred the money to their institutions.
He explained that delays in notifying beneficiaries about completed payments had resulted in some students 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.
Sawyerr illustrated the problem with an example of a student whose school received payment from NELFUND on Monday but who independently paid the same fees by Wednesday because the student was unaware of the earlier transaction.
The student might only discover the initial payment on Friday, leaving the institution with a duplicate payment to resolve.
“It was a genuine error, no suspicion, no accusation, just genuine error,” Sawyerr said.
He added that the proposed system would allow students to initiate payments themselves, helping ensure that transactions are 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,” he said.
How the Tokenised Payment System Will Work
Under the proposed arrangement, students will receive notifications when their approved institutional fees are ready for payment. They can then authorise the transaction through their phones.
Once authorised, the funds will go directly to the designated institution rather than passing through the student’s personal bank account.
Sawyerr stressed that the system would give students control over initiating payments without allowing them to withdraw or redirect the approved funds.
“We’re not giving the students money, but we’re giving them power,” he said.
He explained that a student with an approved payment of ₦200,000, for example, would only be able to authorise payment to the institution specified in the token.
The system would prevent beneficiaries from transferring the money to personal accounts or redirecting it to other schools.
“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,” Sawyerr said.
Iyal also clarified that the token would be linked to a specific institution, not a personal or mobile money wallet.
“It’s not a personal wallet, it’s not a mobile money wallet at all,” he said.
Nearly 400,000 Applications Received
Iyal confirmed that the pilot phase had commenced, with close to 400,000 applications received at the time of the briefing.
However, the officials did not establish how many of those applications had already been processed through the pilot system.
They also did not announce a specific date for full implementation.
NELFUND administers the Federal Government’s student loan programme established under the Students Loans (Access to Higher Education) Act, 2024. The scheme provides eligible students with access to interest-free loans for institutional charges and, where requested and approved, upkeep expenses.
Under the existing arrangement, approved institutional charges are paid directly to schools, while upkeep allowances are transferred to students’ bank accounts.
The proposed tokenised system concerns the authorisation of institutional fee payments and does not, based on the briefing, indicate a change to the existing arrangement for upkeep allowances.
Its success will depend on effective coordination among NELFUND, students and tertiary institutions, particularly in confirming payments and meeting registration deadlines.
By allowing students to authorise payments directly to their schools, the fund hopes to reduce duplicate transactions, minimise refund delays and improve the administration of its student loan scheme.
