The Nigerian Education Loan Fund (NELFUND) has commenced a pilot of a token-based payment system designed to prevent students from paying their school fees twice and reduce complications associated with refunds.
The initiative will allow beneficiaries to authorise payments directly to their respective institutions using tokens linked to the schools, rather than receiving approved tuition funds in their personal bank accounts.
NELFUND Managing Director and Chief Executive Officer, Akintunde Sawyerr, disclosed this during a press briefing on Wednesday, explaining that the new arrangement was developed to address payment errors caused by delays in notifying students that their institutional fees had already been settled.
According to Sawyerr, some beneficiaries had independently paid their school fees because they were unaware that NELFUND had already transferred the approved funds to their institutions.
This resulted in duplicate payments and subsequent requests for refunds.
How NELFUND’s New Token Payment System Will Work
Under the proposed arrangement, students whose institutional fees have been approved will receive notifications informing them that the funds are ready for payment.
Beneficiaries will then be able to authorise the transactions through an application on their mobile phones, allowing the approved money to be transferred directly to their designated institutions.
The system is intended to give students greater control over when payments are initiated while ensuring that the funds are used strictly for their approved purpose.
Sawyerr explained that the initiative would not involve paying tuition funds into students’ personal accounts.
Instead, the token-based arrangement would allow beneficiaries to authorise payments without giving them unrestricted access to the money.
“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 added that the system would prevent beneficiaries from redirecting approved institutional payments to personal bank accounts or other schools.
Why NELFUND Is Introducing the System
NELFUND said the new payment arrangement was designed to address cases in which students unknowingly paid school fees that the fund had already settled.
Sawyerr illustrated the problem with a scenario in which NELFUND paid a student’s institution on Monday, but the student made another payment on Wednesday because the earlier transaction had not been communicated.
The student might only discover on Friday that the fund had already paid the fees, leaving the institution with a duplicate payment that would require reconciliation and a refund.
Sawyerr described such cases as genuine errors rather than deliberate misconduct.
“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.
The token-based system is intended to reduce these situations by allowing students to initiate payments once they receive confirmation that their approved funds are available.
It could also help reduce the administrative work associated with investigating duplicate payments, reconciling school accounts and processing refunds.
NELFUND Says Students Cannot Transfer Tokens to Personal Accounts
NELFUND officials stressed that the token would not operate as a conventional digital wallet.
Sawyerr explained that the system would restrict payments to the institution for which the funds had been approved.
Using an approved payment of ₦200,000 as an example, he said the beneficiary would only be able to authorise payment to the designated institution.
“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, also clarified that the token would not function as a personal wallet or mobile money account.
“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said.
His explanation reinforced the fund’s position that the system would be designed specifically for institutional payments rather than unrestricted cash transfers.
The arrangement is intended to ensure that tuition funds remain tied to the institutions approved for each beneficiary.
NELFUND Pilot Begins as Applications Approach 400,000
During the briefing, Iyal disclosed that the fund had received close to 400,000 applications at the time of the announcement.
“As I speak to you, we already have close to 400,000 applications,” he said.
However, the figure represents applications received and should not be interpreted as the number of students already participating in the token payment pilot.
The officials did not disclose how many beneficiaries had entered the trial phase or how many transactions had been completed through the new system.
They also did not announce a specific date for full implementation.
The pilot will provide an opportunity to assess the payment process and identify any operational issues that may need to be addressed before a wider rollout.
Its effectiveness will depend on timely notifications, reliable payment authorisation and accurate reconciliation of transactions between NELFUND and participating institutions.
Will the New System Affect NELFUND Upkeep Allowances?
The token-based payment initiative focuses on approved institutional fees and should not be confused with the separate process for disbursing upkeep allowances.
Under the existing arrangement described by NELFUND, approved institutional charges are paid directly to students’ schools, while upkeep allowances, where requested and approved, are paid into beneficiaries’ bank accounts.
The new system is intended to give students control over authorising institutional payments without transferring tuition funds into their personal accounts.
NELFUND officials did not announce a change to the separate upkeep allowance process as part of the pilot.
Students should therefore distinguish between payments made to their institutions and any upkeep allowances for which they may qualify under the applicable programme requirements.
What NELFUND’s Token Payment System Means for Nigerian Students
The proposed payment arrangement could help reduce confusion for beneficiaries who need to meet registration deadlines while waiting for confirmation of their education loan payments.
By allowing students to authorise approved institutional payments, the system is intended to improve communication and reduce the likelihood of duplicate transactions.
It could also help institutions and the fund reconcile payments more efficiently and minimise the administrative burden associated with refunds.
However, the actual impact will depend on how effectively the pilot addresses existing communication delays and how smoothly students and institutions can use the system.
Students should continue to follow official NELFUND communications and their institutions’ payment instructions while the pilot is being evaluated.
About NELFUND and Nigeria’s Student Loan Programme
The Nigerian Education Loan Fund administers the Federal Government’s student loan programme established under the Students Loans (Access to Higher Education) Act, 2024.
The programme is intended to expand access to tertiary education by providing eligible Nigerian students with interest-free loans for approved educational expenses.
The token-based payment initiative represents an effort to improve the administration of institutional fee payments and address challenges associated with payment notifications and duplicate transactions.
Although the pilot has commenced, NELFUND has yet to announce a specific date for full implementation or disclose the number of students currently participating.
The next phase will depend on the results of the trial, coordination with participating institutions and the fund’s ability to ensure that approved payments are properly authorised and recorded.