NELFUND: No life imprisonment for unpaid student loans, repayment starts after NYSC

The Nigerian Education Loan Fund (NELFUND) has dismissed as fake news a viral publication claiming that students who fail to repay their education loans after graduation could face life imprisonment. The Fund made the clarification in a post on its official X account on Sunday, describing the publication as fake news.

The clarification comes amid continued circulation of misleading information about the Federal Government’s student loan programme, especially claims about loan disbursement, repayment and penalties for beneficiaries.

What NELFUND said

The purported publication, dated Thursday, May 27, 2027, carried a headline claiming President Tinubu had declared: “All students who fail to repay their loan after graduation will go to jail for life.” NELFUND shared an image of the purported newspaper front page and stamped it with a red “FAKE” mark, indicating the claim did not originate from the government.

NELFUND did not announce any new criminal penalty for beneficiaries who fail to repay their student loans.

When are students expected to repay?

Under the existing framework, beneficiaries are not required to begin repayment immediately after graduation. Repayment starts two years after a beneficiary completes the National Youth Service Corps (NYSC), provided the beneficiary has secured employment.

NELFUND Managing Director, Akintunde Sawyerr, previously said the two-year period is meant to give graduates time to find jobs and become financially stable. For employed beneficiaries, employers are required to deduct 10% of the salary and remit it to NELFUND. Self-employed beneficiaries are expected to pay directly. Those who remain unemployed after two years do not have to repay until they secure work or start earning an income. NELFUND has also said unemployed beneficiaries can seek an extension under the applicable process.

Disbursement figures

NELFUND was established under the revised Student Loan Act signed by President Bola Tinubu in April 2024. The application portal opened on May 24, 2024, initially for federal tertiary institutions before expanding to state-owned institutions.

By March 2026, NELFUND had disbursed N206.29 billion to 1.16 million beneficiaries across 270 institutions. By August 2026, the amount had risen to N322.69 billion, with N192.89 billion paid as institutional fees and N129.80 billion released as upkeep allowances.

In its Student Loan Disbursement Status Report generated on September 3, 2026, NELFUND said total disbursements had risen to N355.87 billion. It processed 1,659,853 applications, with N192.89 billion paid to 319 beneficiary institutions as institutional fees and N162.98 billion disbursed directly to students as upkeep allowances.

University ranking plans

The Federal Government is also working to strengthen Nigeria’s tertiary education ranking system. Nairametrics reported on September 2, 2026, that the government plans to develop a credible ranking framework that could serve as a benchmark for higher education across Africa. Minister of Education, Dr Tunji Alausa, said the government met with the Nigerian University Ranking Advisory Committee and the Tertiary Education Trust Fund to discuss improving the country’s ranking framework and institutional performance.

For Nigerian students and graduates relying on the loan scheme, the clarification removes the fear of criminal punishment and confirms that repayment only begins after graduates are employed and financially stable.