BRITISH ASSOCIATION FOR
INTERNATIONAL & COMPARATIVE EDUCATION
The Nigerian Education Loan Fund: A Path to Inclusion or a Debt Trap?
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Abstract
This article examines the introduction of the Nigeria Education Loan Fund (NELFUND) under the Student Loan Act 2024. It raises questions about the promises of the scheme in enabling participative (in)equity in Higher Education (HE) and the potential risks that await the future of the policy if not properly implemented and equitably administered. By evaluating the promises and pitfalls of NELFUND, this article contributes to the ongoing discourse on educational financing and access in Nigeria and the broader implications of neoliberal approaches to HE in developing countries.
Introduction
In May 2024, the Nigerian government introduced the Nigerian Education Loan Fund (NELFUND) under the Student Loan (Access to Higher Education) Act 2024, a measure billed as a game changer in increasing access to HE. This Act places Nigeria into the larger worldwide trend of neoliberalising HE 鈥� a tendency that shifts HE from a public good to a market-driven commodity. While the government argues that initiatives like NELFUND can widen access by removing financial barriers, we contend that such policies can also exacerbate the commodification of education, putting the burden of access solely on students’ and risking the formation of a debt-ridden generation.
At its root, NELFUND demonstrates how policy debates on the pecuniary benefits of HE are hollowing out its 鈥渟ocial good鈥� outcome, thereby shifting the burden of the cost of HE to families through the loan scheme. As Nigeria grapples with soaring unemployment, underfunded universities, and systemic inequalities, the introduction of a large-scale loan scheme raises critical questions: Can NELFUND truly fulfil its promise of broadening inclusion and equity, or will it exacerbate the very inequalities it hopes to address?
The Promise of NELFUND
NELFUND seeks to remove financial barriers that have historically excluded students from low-income families. The fund provides loans to qualified Nigerians to cover tuition, cost of living and other basic expenses associated with study in an approved public tertiary academic institution or technical and vocational education centre in Nigeria. The removal of income thresholds and the need for guarantors in the latest amendment of the Act are key features intended to make the loans more accessible to a wider range of students. On the surface, these changes could significantly increase access to higher education, allowing students who might otherwise be unable to afford the opportunity to pursue HE that is still regarded as 鈥渇ree鈥� in publicly funded universities. To understand how significant this initiative is to access HE, the application portal received over 100,000 applications between the 24th of May and July 2024 after it was , even though the application process for many applicants.
Challenges in Achieving Inclusion and Equity
While NELFUND has a huge potential to turn the tide on the perennial problem of equitable access to HE in Nigeria, it faces considerable challenges, primarily due to Nigeria鈥檚 economic realities. Nigeria鈥檚 unemployment rate, which was over 33% in 2021, shows that a significant number of university graduates remain unemployed. This underlies the complication of repaying student loans for students from low socioeconomic backgrounds and may deter them from applying. Without income-contingent loan (ICL) repayment options, as in England and Australia, graduates may find themselves trapped in a cycle of debt, unable to meet their repayment obligations due to a lack of steady income.
A closer look at the UK and US student loan systems is instructive of the future that awaits NELFUND. In the UK, while the ICL offers some relief, it has led to long-term debt for many graduates, with only a small percentage fully repaying their loans. A recent point is the work of and colleagues, which found that graduates aged 25 without student loans are more likely to own homes and less likely , challenging some assumptions about the financial benefits of HE and highlighting how debt can reinforce income inequalities. Mirroring the , with over $1.8 trillion in outstanding loans, it also raises concerns about the sustainability of NELFUND and points to the potential risks to the Nigeria government, if not carefully managed.
Putting the Horse before the Cart
The capitalist idea that providing loan to students will solve the access problem in Nigeria HE is utopic, as there is a palisade of equity issues at the colonial foundation of the Nigerian education in general and HE in particular that must be dealt with. The Nigerian HE system has yet to evolve a comprehensive bill that protects the rights of students who will now become 鈥渃onsumers鈥� going forward. For example, the proliferation of private universities in Nigeria was first viewed as a solution to the post-colonial and post-adjustment challenges of access to HE. However, these institutions have only admitted 6% of admission seekers in the last few years. Their high cost of tuition makes them inaccessible to a more significant percentage of the population, particularly students from low-income families. This privatisation approach creates a divide in which only those with cultural and economic capital may attend HE, leaving a majority of Nigerian youths to scramble for places in an overburdened and underfunded public university system.
Also adopting an ICL repayment model would ensure that graduates only start repaying their loans once they earn above a certain income threshold. This approach would provide a safety net for those who are unemployed or underemployed, reducing the risk of default and financial distress. In addition to reforming the repayment structure, there is a pressing need for policies that stimulate job creation and economic growth. A point in the case is the recent curriculum review through the Core Curriculum and Minimum Academic Standards , which plans to address the mismatch between graduate skills and the needs of the labour market. The government will now need to encourage job creation in high-impact sectors such as: technology and agriculture by providing seed funding for start-ups to significantly reduce unemployment.
A Path Forward?
Without a doubt, NELFUND carries the promise of transforming access to higher education and promoting inclusion and equity. However, its success will depend not just on accessibility of the loan but on creating a system that protects students from unmanageable debt, protects their rights as stakeholders in the emerging funding model and equips them for the realities of the job market. Without strategic reforms鈥攍ike income-contingent repayment, curriculum alignment with industry needs, and robust job creation initiatives鈥擭ELFUND risks becoming another well-intentioned policy that deepens existing inequalities. The future of Nigerian HE hinges on the government鈥檚 ability to implement these changes and truly deliver on the promise of inclusion and equity, not just in rhetoric, but in practice.
