The Nigerian Education Loan Fund (NELFUND) has commenced a pilot of a tokenised payment system designed to prevent students from paying their school fees twice and eliminate refund complications, with nearly 400,000 applications received under the ongoing process.

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

Under the arrangement, beneficiaries would receive notifications when their approved fees are ready for payment and use an application on their phones to initiate transfers from their loan funds to their institutions, rather than receiving the money in their personal bank accounts.

Sawyerr said the initiative was developed to address cases in which students paid their fees without knowing that NELFUND had already settled the bills on their behalf.

He explained that delays in notifying students about completed payments had led to duplicate payments, forcing institutions to process refunds.

According to him, a student might pay school fees independently to meet an academic deadline, unaware that NELFUND had already transferred the same amount to the institution.

He illustrated the problem with an example in which the fund paid an institution on Monday, but a student, unaware of the transaction, paid the same fees by Wednesday and only discovered the earlier payment on Friday.

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

Sawyerr said the new system would eliminate such situations by giving students control over the initiation of payments while ensuring that the funds went directly to the approved institutions.

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

He stressed that the arrangement was not a cash-disbursement system but a mechanism that would allow students to authorise payments without gaining unrestricted access to the funds.

“We’re not giving the students money, but we’re giving them power,” he said.

The managing director added that beneficiaries would neither be able to transfer the funds to their personal accounts nor redirect them to other institutions.

He explained that a student with an approved payment of ₦200,000, for instance, would only be able to authorise the transfer to the designated school’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, clarified that the token would be linked to a specific institution and would not function as a personal or mobile money wallet.

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

He added that the institution-specific arrangement would prevent beneficiaries from redirecting approved payments to other schools or personal accounts.

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

However, the officials did not specify when the system would be fully implemented. The number of applications cited at the briefing also does not necessarily represent applications already processed through the pilot.

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 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 paid into beneficiaries’ bank accounts.

The proposed tokenised system specifically targets institutional fee payments and does not indicate a change to the existing arrangement for upkeep allowances.

The success of the new mechanism will depend on effective coordination among NELFUND, students and tertiary institutions to ensure timely payment authorisation, confirmation and accurate records, particularly where schools impose deadlines for fee payments and registration.