By Divine Sam

The Nigerian Education Loan Fund (NELFUND) has begun testing a new token-based payment system designed to prevent students from paying their school fees twice and reduce the difficulties associated with processing refunds.

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

The development comes after the fund identified cases where students paid their school fees without knowing that NELFUND had already transferred the money to their institutions, resulting in duplicate payments and the need for refunds.

Sawyerr explained that delays in communicating completed payments to beneficiaries had contributed to the problem, particularly when students were under pressure to meet school fee deadlines.

“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.

He illustrated the situation by explaining that a student could pay their fees on Wednesday without knowing that NELFUND had already settled the bill on Monday, only to discover the earlier transaction on Friday.

“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.

According to the NELFUND chief executive, the proposed system is intended to eliminate such situations by allowing students to initiate payments themselves and ensuring that the money goes directly into the accounts of their designated institutions.

“We want to eliminate that need for refunds. So we’re placing the power of payment in the hands of the students,” Sawyerr said.

Under the arrangement, students will receive notifications when their approved school fees are ready for payment and will be able to authorise the transactions through an application on their mobile phones.

Unlike a conventional cash disbursement, the system will restrict the funds to the institution for which the payment was approved. Students will not be able to transfer the money into their personal bank accounts or redirect it to another school.

Emphasising the purpose of the arrangement, Sawyerr said, “We’re not giving the students money, but we’re giving them power,” he said.

He further explained that the token would ensure that the approved funds could only be used for their intended purpose.

“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.

Sawyerr added that a student whose approved school fee payment was N200,000 would only be able to authorise the transfer to the designated institution’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.

NELFUND Executive Director Mustapha Iyal also clarified that the token would be tied to a specific institution rather than a personal account or mobile money wallet.

“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said.

He explained that the institution-linked arrangement would prevent beneficiaries from redirecting approved school fee payments to other institutions or personal accounts.

Iyal also confirmed that the pilot phase had commenced, with the fund receiving close to 400,000 applications at the time of the briefing.

“As I speak to you, we already have close to 400,000 applications,” he said.

However, the officials did not provide a specific date for the full implementation of the new payment system. They also did not indicate that all the applications received had already been processed through the pilot programme.

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, approved institutional charges are paid directly to students’ institutions, while upkeep allowances are transferred to beneficiaries’ bank accounts.

The proposed token system is specifically intended to improve the payment of institutional charges and should not be confused with the regular disbursement of approved upkeep allowances.

The student loan scheme was introduced to ease the financial burden of tertiary education and help more Nigerians access higher education, particularly those who struggle to meet the cost of schooling.

However, the administration of the loans requires proper coordination between NELFUND, students and their institutions to ensure that applications are verified, payments are accurately recorded and beneficiaries receive timely information about their financial status.

The new arrangement is expected to address one of the challenges associated with the process by giving students greater control over when approved school fee payments are initiated while preventing the funds from being diverted.

Its success will depend on how effectively NELFUND and participating institutions manage payment notifications, authorisations and transaction records, especially when students face registration deadlines.

For now, the token-based payment system remains at the pilot stage, with further details on its full rollout yet to be announced.