As of January 2026, the Nigerian Education Loan Fund (NELFUND) has become a massive financial operation, having disbursed over ₦161.9 billion to more than 864,000 students since its inception. While the scheme has successfully democratized access to higher education on paper, experts and policymakers are raising red flags regarding its long-term financial and strategic sustainability.
The primary concern is a “structural mismatch”: the scheme currently funds thousands of students in overcrowded academic fields while Nigeria suffers from a chronic shortage of technical and vocational skills.
1. NELFUND 2026: The Data at a Glance
The scale of the project is unprecedented in Nigeria’s history, but the distribution of loans reveals a heavy tilt toward traditional university degrees.
| Category | Data as of January 6, 2026 |
| Total Applications | 1.33 Million |
| Total Beneficiaries | 864,000+ Students |
| Total Disbursed | ₦161.97 Billion |
| Institutional Fees (Tuition) | ₦89.94 Billion |
| Upkeep Allowance (Stipends) | ₦72.03 Billion |
| University Dominance | ~90% of all applications |
2. The Case for a “TVET-First” Strategy
A growing consensus suggests that for the loan scheme to be sustainable, it must prioritize Technical and Vocational Education and Training (TVET).
Why the Shift is Necessary:
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Employability: Unlike many academic graduates who face a saturated white-collar market, trained technicians (welders, mechatronics specialists, solar installers) are in high demand across Nigeria’s oil, gas, and renewable energy sectors.
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Entrepreneurship: Technical skills lend themselves to self-employment. A vocational graduate can start a small enterprise immediately, creating a faster path to loan repayment.
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Forex Leakage: Nigeria currently spends millions of dollars importing foreign technical labor for infrastructure projects. Funding local TVET students reduces this dependency.
3. Critical Risks to Financial Sustainability
Without periodic review, NELFUND faces four “predictable” hurdles:
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Graduate Unemployment: If graduates cannot find jobs, they cannot repay loans. Repayment is currently due two years post-NYSC, but high unemployment rates make this timeline optimistic for many.
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Data & Enforcement Gaps: Recovering loans in an economy with a large informal sector is difficult. Without integrated tax and payroll tracking, “strategic defaults” could become common.
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Macroeconomic Volatility: High inflation and currency depreciation erode the real value of repayments over time, putting the fund’s liquidity at risk.
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The “National Cake” Syndrome: There is a cultural risk of beneficiaries viewing the loan as a government grant rather than a debt to be repaid.
4. Proposed Reforms for 2026–2030
To avoid the pitfalls of past failed credit schemes (like the People’s Bank), analysts suggest:
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Incentivized Interest Rates: Maintain 0% interest for high-priority vocational skills but introduce minor indexation for non-priority academic courses to manage fund liquidity.
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Private Sector Integration: Partnering with companies to track beneficiaries through payroll systems for automatic deductions once they are employed.
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Institutional Transparency: Forcing universities to publish “Employability Reports” so students know the market value of their degree before taking on debt.
“A sustainable student loan system depends fundamentally on graduate employability and the state’s economic needs, not just on increasing enrollment numbers.” — Tunde Sodade, Strategic Intent LLP
