BREAKING: NELFUND launches token-based system to prevent double payment of school fees

The Nigerian Education Loan Fund (NELFUND) has begun testing a new tokenised payment system aimed at preventing students from paying school fees twice and eliminating complications associated with refunds.

The scheme comes as the student loan agency has received nearly 400,000 applications under its ongoing process.

NELFUND Managing Director, Akintunde Sawyerr, disclosed this on Wednesday during a press briefing, explaining that the new system would allow students to make payments directly to their respective institutions using tokens linked to their schools.

Under the proposed arrangement, students would use a mobile application to authorise the transfer of approved loan funds to their institutions instead of receiving the money directly 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 could arise when the fund paid an institution but the student, unaware of the transaction, proceeded to pay independently 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.

The loan scheme is intended to ease the financial burden of tertiary education and improve access for students who might otherwise struggle to meet the cost of schooling. However, the payment process requires coordination among NELFUND, beneficiaries and tertiary institutions to ensure that applications are verified, approved amounts are accurate and payments are properly recorded.

NELFUND’s payment guidelines and institutional verification procedures form part of that process. Where students pay their fees before the fund’s disbursement reaches their institutions, refunds may be required after the institutions receive the loan payments.

Sawyerr’s explanation suggests that delayed communication about completed payments has created another administrative challenge: students may be unaware that the fund has already settled their fees and make payments independently to meet registration or other academic deadlines.

The new system is intended to address that gap by giving students the ability to authorise institutional payments through a token linked to their schools.

According to Sawyerr and Iyal, the restriction would prevent the funds from being diverted to personal accounts or transferred to other institutions.

Although Iyal confirmed that the pilot had commenced, the officials did not provide a specific date for full implementation during the briefing. The close to 400,000 applications cited by Iyal should also not be interpreted as the number of applications already processed through the pilot, as the briefing did not establish that distinction.

The effectiveness of the new arrangement will depend on how smoothly students, institutions and NELFUND can coordinate payment authorisation, confirmation and records, particularly when institutions impose deadlines for fee payments and registration.

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