Nigeria's Student Loan Act: One Year In, Has Higher Education Become Accessible?

When President Bola Tinubu signed the Access to Higher Education Act — commonly known as the Student Loan Act — into law in April 2025, it was heralded as the most significant intervention in Nigerian higher education financing since the establishment of the federal university system in the 1960s. The Act created a legal framework for providing interest-free loans to Nigerian students enrolled in accredited public tertiary institutions, with repayment structured as a percentage of post-graduation income.

One year later, the Nigerian Education Loan Fund has disbursed approximately 95 billion naira to 180,000 students across 120 federal and state universities, polytechnics, and colleges of education. The programme has been praised for reaching students who would otherwise have been unable to afford tuition, but it has also faced criticism over processing delays, limited institutional coverage, and questions about long-term financial sustainability.

For 21-year-old Aisha Mohammed, a second-year medical student at Bayero University in Kano, the loan has been nothing short of transformative. "My father is a civil servant. There was no way he could have paid my tuition of 250,000 naira per session plus accommodation and books," she said. "The loan means I can focus on my studies instead of worrying about money. I want to be a doctor. Without this, I would have dropped out."

Aisha's experience mirrors that of thousands of students across Nigeria's public university system, where tuition fees — though modest by international standards — have risen significantly in recent years as universities, battered by decades of underfunding, struggle to maintain quality.

How the Scheme Works

The Student Loan Act established the Nigerian Education Loan Fund as an independent body under the supervision of the Federal Ministry of Education. The fund provides loans covering tuition, accommodation, and a modest living allowance of up to 50,000 naira per semester for eligible students.

Eligibility is means-tested: applicants must demonstrate household income below 500,000 naira per annum, provide proof of admission to an accredited public institution, and have a guarantor — typically a civil servant of not below Grade Level 12. The loan is interest-free during the study period and for the first two years after graduation, after which a nominal interest rate of 2 percent per annum applies. Repayment begins three years after graduation or upon employment, whichever comes first, at a rate of 10 percent of monthly income.

The application process is entirely online, through the NELFUND portal, which has processed approximately 420,000 applications since its launch in June 2025. Of these, approximately 180,000 have been approved, 60,000 are under review, and the remainder were rejected due to incomplete documentation, ineligibility, or institutional accreditation issues.

The Funding Question

The most pressing challenge facing the programme is financial sustainability. The 2026 budget allocated 250 billion naira to the loan fund, but the demand far exceeds available resources. The NELFUND estimates that approximately 2.5 million students in public tertiary institutions would be eligible for loans, implying a total annual requirement of approximately 1.2 trillion naira — nearly five times the current budget allocation.

The gap between demand and supply has resulted in significant processing delays. Students who applied in the first wave of June 2025 reported waiting four to six months for disbursement, with some receiving funds only after the semester had ended. By the second wave, launched in November 2025, processing times had improved to approximately eight weeks, but bottlenecks remain, particularly in the verification of guarantor documentation.

"The demand is overwhelming, and we are doing everything we can to scale our operations," said NELFUND Managing Director Architect Sunday Thomas during a press briefing in March. "We are working with the Federal Inland Revenue Service to automate income verification and with the Joint Admissions and Matriculation Board to streamline institutional data sharing."

To bridge the funding gap, the government has explored multiple financing mechanisms. In March 2026, the NELFUND announced a partnership with the Bank of Industry to create a 100 billion naira education financing facility, leveraging development finance and concessional lending. Discussions are also underway with multilateral institutions, including the World Bank and the African Development Bank, for additional concessional financing.

Institutional Challenges

The programme's restriction to public institutions has been a subject of debate. Nigeria's approximately 280 private universities, polytechnics, and colleges of education — which collectively enroll approximately 1.5 million students — are excluded from the scheme, despite the fact that many private institutions serve students from low-income backgrounds who face even higher tuition burdens than their public-sector counterparts.

"The exclusion of private institutions is discriminatory and counterproductive," said Professor Peter Okebukola, former Executive Secretary of the National Universities Commission. "Many private universities are accredited and provide quality education. Their students should not be penalised simply because they chose a private institution."

The government has indicated that the scheme may be expanded to include private institutions in subsequent phases, but no timeline has been announced. In the interim, some private universities have established their own internal scholarship and loan programmes, though the coverage is limited.

Within public institutions, administrative capacity varies widely. Some universities have dedicated offices to assist students with loan applications and follow-up, while others have been slower to engage with the programme. The National Universities Commission has issued directives requiring all federal universities to establish loan liaison offices, but compliance has been uneven.

Impact on Access and Equity

Early data suggest that the loan programme is achieving its primary objective of expanding access. The NELFUND reports that approximately 55 percent of approved loans have gone to students from the northern states, where poverty rates are highest and tertiary enrollment rates are lowest. Female students account for 47 percent of beneficiaries, reflecting the programme's gender-sensitive outreach efforts.

Enrollment in public universities increased by approximately 8 percent in the 2025-26 academic year, the first significant increase in enrollment in nearly a decade. While multiple factors contribute to enrollment trends, university administrators cite the loan programme as a significant driver.

The programme has also had an indirect effect on the quality of education. With more students able to pay tuition consistently, universities have reported a decline in the dropout rate — from approximately 22 percent in 2023 to 17 percent in 2025-26. The financial stability provided by loan-funded tuition payments has also allowed some universities to invest in laboratory equipment, library resources, and faculty development.

The Repayment Challenge

The ultimate test of the programme's sustainability will be repayment. Nigeria's high youth unemployment rate — approximately 33 percent according to the National Bureau of Statistics — raises questions about whether graduates will be able to meet their repayment obligations. The scheme's income-contingent repayment structure is designed to mitigate this risk, but the effective functioning of the repayment mechanism depends on the ability of the Federal Inland Revenue Service to track graduate employment and income.

The NELFUND has signed a Memorandum of Understanding with the FIRS to integrate loan repayment into the Pay-As-You-Earn tax system, allowing automatic deductions from graduates' salaries. However, the large informal sector — which accounts for approximately 65 percent of employment in Nigeria — poses a significant enforcement challenge.

"We are designing repayment mechanisms that are fair and realistic," said Thomas. "If a graduate is unemployed or earning below a certain threshold, repayment is deferred. We are not in the business of burdening young people with debt they cannot afford."

Lessons and Outlook

The Nigerian Student Loan Act represents an ambitious attempt to democratise access to higher education in a country where the cost of education has been a significant barrier to social mobility. The programme's first year has demonstrated both the enormous demand for education financing and the operational challenges inherent in scaling a national loan scheme.

The experience of other countries offers instructive parallels. Kenya's Higher Education Loans Board, established in 1995, now serves approximately 120,000 students annually and has a recovery rate of approximately 85 percent. South Africa's National Student Financial Aid Scheme, despite significant challenges, has supported millions of students since its inception. Nigeria's programme, while younger and larger in scale, can draw on these models to refine its approach.

As the programme enters its second year, the priorities are clear: expand funding, improve processing efficiency, extend coverage to private institutions, and build the administrative infrastructure for effective repayment collection. If these challenges are met, the Student Loan Act could prove to be one of the Tinubu administration's most enduring legacies — a structural reform that opens the doors of higher education to millions of Nigerians regardless of their economic circumstances.

For students like Aisha Mohammed, the loan is not just a financial instrument. It is a lifeline, a vote of confidence in their potential, and a reminder that in a country of abundant talent, the only barrier to achievement should be ability, not income.