History Of Student Loans in Nigeria

The history of student loans in Nigeria reflects the nation’s changing educational policies and economic challenges.

The trend started with the formation of the Nigerian Students’ Loans Board in 1972 and has snowballed in aggression to the recent passing of the Access to Higher Education Act of 2023.

The Early Years: Nigerian Students Loans Board (1972-1991)

The Nigerian Students’ Loans Board was established in 1972 to offer financial facilities to Nigerian students desiring higher education.

From 1973 to 1991, the Board gave away loans amounting to 46 million Naira to enable needy students to pursue their undergraduate or postgraduate studies locally or abroad.

The government showed its staunch interest in the sector. However, some problems existed, such as a weak recovery from the repayments of the loans.

The Struggle for Sustainability

The sustainability of student loans has always been an issue in Nigeria. The Nigerian Students Loans Board first came into existence in 1972 to offer these loans to provide financial help to students.

However, by the early 1990s, the program faced a crisis.

The recovery of loan repayments has been a big failure. Defaults upon defaults are now hitting the all-time lowest point, as the cycle threatens to kill the scheme’s viability.

Many graduates were in a tight situation, whether to get a steady job or generate enough revenue to pay their debts adequately and appropriately.

Some pertinent issues include poor financial allocation, lack of sufficient funding, and limited loan availability due to economic downturns and choppy oil price variations.

These financial challenges highlighted the need for a more robust and autonomous student loan system.

The Proposal of an Educational Bank

A proposal for an education bank emerged in response to the challenges faced by the Nigerian Students Loans Board.

The concept would mean setting it up as a central intermediary in Nigeria’s education and credit market and mobilizing sector resources towards foreign funding.

In this way, the proposed Education Bank would reduce the government’s education funding and still be another leeching point, drawing meager resources into other pressure areas of the economy.

Various functions are performed in the field, including providing student funds, lending for publishing buildings, financing the leasing of equipment, financing projects, mobilizing funds, and giving advice.

The idea was that such an institution would do a better job disbursing and recovering student loans and winding into other general education banking functions.

That would mean setting up better and more sustainable education funding models for future times and situations and using these models to help Nigerian students with higher education.

The Revival in 2016

These are revival reforms to the student loan system in Nigeria, where the government has been retreating in financing higher education.

After the initial student loan scheme faced sustainability challenges, the concept lay dormant for years.

Yet the growing demand for an increasingly well-educated workforce and the high cost of schools push it back to the center of the national policy discussion.

The Speaker of the House of Representatives, Hon. Femi Gbajabiamila, brought it back to the National Assembly for a second reading on September 14, 2016.

It was a plan drafted to eliminate all the perceived failures in the previous loan scheme and establish a more positive framework for financing higher education.

The objective was to develop a legal and policy framework that will facilitate the advance of loans to indigent or low-income Nigerians, helping to overcome the financial barriers that have prevented students from pursuing higher education.

The bill’s reintroduction will obviously revive interest in student loans and show the government’s commitment to investing in the nation’s human capital.

It recognized that access to higher education was crucial for economic development and social mobility.

The efforts culminated in President Bola Ahmed Tinubu signing the Student Loans (Access to Higher Education) Act, 2023.

The Act created the Nigerian Education Loan Fund (NELFUND) as a more sustainable student loan scheme.

BNELFUND would be funded from various financial sources, including profits from national natural resources, taxes, levies, duties, education bonds, and endowments.

This Act also empowered the CBN to establish a Special Committee responsible for managing, administrating, disbursing, recovering student loans, and managing the Nigerian Educational Trust Fund’s collateral.

The committee’s makeup aligned with this perspective, as it was keen on representatives from various backgrounds to ensure a diverse and inclusive fund management approach.

The revival of the student loan system in Nigeria represents a new era for higher education financing in the country.

It reflects the enormous belief in the importance of education inscribed in national development and commitment to making it a possibility for all Nigerians to take on higher education at whatever cost level they can afford.

The Student Loans (Access to Higher Education) Act of 2023 could make this type of credit a mandatory contribution to NELFUND.

The Access to Higher Education Act, 2023

On June 12, 2023, President Bola Ahmed Tinubu signed the Student Loan Bill, later rechristened as the Access to Higher Education Bill, 2023.

The Act introduced the Nigerian Education Loan Fund (NELFUND), which revolutionized the student loan system in Nigeria. NELFUND was intended to be funded through such funds as proceeds from national resources and taxes.


Today, in Nigeria, a number of programs and schemes have been established that offer financial assistance to students to help them achieve their dreams in education.

The government collaborates with financial institutions and universities to form the prime mover that affects this business environment.

The laser focus has been on student loan accessibility and fairness, which then becomes basic support for scholars in Nigeria who dare to dream and aspire.

This underlines more than a sterile financial haven; it stands for evidence of this nation’s commitment to its younger generation in pursuit of the ultimate goal: a quality education.

This is natural and shows the dynamism of Nigerian students’ needs and aspirations on the one hand and general changes in the country’s socio-economic situation on the other.