Student Loan Scheme Now N200bn Economic Stimulus, Says Financial Expert

Funmi Ogundare 

The Group Chief Financial Officer and Head of Strategy/Principal Investment at Leadway Holdings Limited, Tunde Alao-Olaifa, has said that the Nigeria’s student loan scheme has evolved into a N200 billion economic stimulus reshaping access to education and injecting liquidity into the economy.

He described the initiative as a financial time machine, saying the Nigerian Education Loan Fund (NELFUND) has rapidly expanded within a year, enabling young Nigerians to borrow against future earnings to finance their education while simultaneously stimulating economic activity.

The financial expert explained that the core idea behind student loans is to allow students borrow from their future earnings to fund their present education.

“The basic premise of a student loan is a beautiful piece of financial time travel. Right now, you are 19, you have no money, but in five years, you will be an engineer, an accountant, or perhaps a highly paid prompt engineer. You will have money then. So, you borrow some of your future money, pull it back to the present, pay your school fees, and then spend your future years paying back the past,” he stated.

He noted that before the intervention of the Federal Government, most Nigerian students depended largely on family support, which had become increasingly strained.

“Historically, this time machine was powered almost entirely by parents, and the benevolent uncle in the Diaspora, but over the last few years, that bank hit its absolute credit limit,” he added.

According to him, the introduction of the student loan scheme under President Bola Tinubu marked a significant shift in funding education, stressing that human capital development could no longer rely on financially stretched parents.

Citing operational data, Alao-Olaifa disclosed that NELFUND recorded exponential growth between March 2025 and March 2026.

“In early 2025, they had around 451,000 applicants and had disbursed roughly N45 billion. By March 2026, we are looking at 1.7 million applications, over 1.1 million actual beneficiaries, and a staggering N206.2 billion out the door,” he said.

He described the growth trajectory as unprecedented, noting that it represented nearly a fourfold increase in applications and a 4.5 times jump in funds disbursed within a year.

Alao-Olaifa also commended the management of the fund, particularly its Managing Director, Akintunde Sawyerr, for what he termed efficient and transparent operations.

“What is genuinely shocking is the quiet, boring competence of it all. Historically, a N200 billion government intervention is accompanied by crashing portals, ghost beneficiaries, and a Senate probe. But under the leadership of Mr. Akintunde Sawyerr, NELFUND has operated without the usual theatre of scandals,” he said.

He revealed that about N128.8 billion, representing roughly 65 per cent of disbursements, had been paid directly to institutions for tuition, while N77.4 billion, or about 35 per cent, had been released as upkeep allowances to students.

Describing the allowances as a targeted economic intervention, the financial expert said the scheme had effectively injected billions into local economies.

“When a government wants to stimulate an economy, it usually does something boring. But by dropping billions directly into the accounts of undergraduates, the administration has essentially executed the most targeted, high-velocity stimulus package in recent Nigerian history,” he stated.

Alao-Olaifa added that students typically spend money quickly on essentials such as rent, data, textbooks and food, thereby supporting local businesses and easing financial pressure on families.

On repayment concerns, the expert observed that inflation would significantly reduce the real value of loans over time, describing the facility as more of a social investment than a commercial venture.

“NELFUND is not really a commercial loan book. It is an accepted structural subsidy. The goal isn’t to run a profitable hedge fund; the goal is human capital formation,” he said.

However, he warned about the risk posed by increasing migration of young Nigerians, noting that graduates relocating abroad could undermine loan recovery.

“If not addressed, the loan scheme becomes the most efficient taxpayer-funded talent-export subsidy in Africa,” he cautioned.

To address this, he proposed a structured diaspora repayment framework, including automated deductions through global payment platforms and linking loan status to passport renewal processes.

Despite the challenges, Alao-Olaifa described the initiative as one of the most impactful policy tools in recent years.