NELFUND probes 34 schools over unpaid student refunds

The Nigerian Education Loan Fund (NELFUND) has launched a significant investigation into 34 tertiary institutions across Nigeria for allegedly failing to refund students whose tuition fees were paid twice under the federal government's student loan scheme. This probe highlights critical administrative and legal challenges within the nascent student loan programme, established under the Students Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024. The core issue stems from students making initial tuition payments before NELFUND disbursed loans for the same fees, leading to double payments that institutions have reportedly withheld. While NELFUND itself lacks direct prosecutorial powers, its collaboration with anti-corruption agencies signals potential legal ramifications for defaulting institutions, raising questions of accountability and the protection of student rights.

The integrity and efficacy of Nigeria's ambitious student loan scheme are currently under scrutiny following an investigation initiated by the Nigerian Education Loan Fund (NELFUND) into 34 tertiary institutions. These institutions are accused of withholding refunds for tuition fees that were paid twice for the same students under the federal government's loan programme. This development, first reported by Punch Nigeria, underscores significant operational challenges and potential legal liabilities within the implementation of the Students Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024.

The probe by NELFUND, a pivotal financial institution established to provide interest-free loans for higher education, raises critical questions about institutional accountability, financial transparency, and the protection of student welfare. For legal practitioners, this scenario presents a complex interplay of statutory obligations, contractual duties, and the potential for regulatory enforcement, even as NELFUND navigates its own powers in compelling compliance. The outcome of these investigations will undoubtedly shape the future administration of the student loan scheme and set precedents for financial management within Nigeria's tertiary education sector.

The Nigerian student loan scheme was initially established by the Students Loans (Access to Higher Education) Act, 2023, signed into law on June 12, 2023, with the aim of providing easy access to higher education for indigent Nigerians through interest-free loans. This Act subsequently faced challenges related to governance, management, loan purposes, eligibility criteria, and repayment provisions, leading to its repeal and re-enactment as the Students Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024, on April 3, 2024. The re-enacted Act established NELFUND as a body corporate empowered to provide loans for tuition, fees, charges, and upkeep during studies in approved tertiary institutions.

NELFUND's primary objective is to provide financial support directly to educational institutions for tuition fees, and in some cases, upkeep allowances to students, thereby removing financial barriers to higher education. The current issue of double payments arose because the student loan scheme commenced midway through an academic session. Many students had already paid their tuition fees out-of-pocket or through other means before NELFUND disbursed the loan amounts directly to their respective institutions for the same academic period. This resulted in institutions receiving two payments for a single student's tuition, creating an obligation for them to refund the excess amount to the students.

The ongoing investigation by NELFUND, while significant, operates within a defined legal framework. The Managing Director of NELFUND, Akintunde Sawyerr, has publicly stated that the agency itself lacks the statutory authority to compel institutions to issue refunds or to prosecute defaulting officials. However, NELFUND's mandate under the Students Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024, as a body corporate with powers to sue and be sued, implies a regulatory oversight function over the student loan scheme.

The legal obligation for tertiary institutions to refund overpayments to students can be grounded in several principles. Firstly, under contract law, the payment of tuition fees creates a contractual relationship between the student and the institution. An overpayment, whether by the student or a third party like NELFUND, would typically give rise to an obligation to refund the excess under the principle of unjust enrichment. Secondly, many institutions have internal refund policies that address overpayments or withdrawals, which, though varying, generally acknowledge the need to return funds received in error or in excess of services rendered. The failure to refund constitutes a breach of this implied or express contractual duty and potentially an act of financial impropriety.

Despite NELFUND's stated limitations in direct enforcement, the agency is collaborating with anti-corruption bodies such as the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC). These agencies possess the legal powers to investigate and prosecute financial crimes, including misappropriation of funds, which could be applicable if institutions are found to have deliberately withheld the refunds. The involvement of these bodies elevates the potential consequences for institutions beyond administrative sanctions, such as the suspension of future loan disbursements from NELFUND. Furthermore, affected students have the right to pursue civil actions against institutions for the recovery of their funds, potentially claiming breach of contract or unjust enrichment.

To prevent future occurrences, NELFUND plans to introduce a new tokenised payment system, which aims to enhance transparency and ensure that payments are accurately reconciled. This proactive measure, alongside the current investigations, underscores the need for robust financial management systems within tertiary institutions to comply with the Act and its operational guidelines. The probe also serves as a stern warning against arbitrary increases in tuition fees, which NELFUND has reportedly refused to pay in some instances.

The NELFUND investigation into 34 tertiary institutions over unrefunded double tuition payments represents a critical juncture for Nigeria's student loan scheme and the broader tertiary education sector. While NELFUND may lack direct prosecutorial powers, its collaboration with anti-corruption agencies like the EFCC and ICPC signals a serious commitment to ensuring accountability and protecting student interests. Institutions found culpable could face not only administrative sanctions, including the suspension of future loan disbursements, but also legal action from students or the state.

For legal practitioners advising tertiary institutions, it is imperative to conduct immediate and thorough internal audits of bursary departments to identify and rectify any discrepancies in fee payments. Ensuring transparent financial records and prompt reconciliation of all funds received from NELFUND and students is crucial to mitigate legal and reputational risks. This episode underscores the need for institutions to align their financial practices with the objectives of the Students Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024, and to uphold their ethical and legal obligations to students. The resolution of these issues will be vital in building confidence in the student loan scheme as a sustainable pathway to accessible higher education in Nigeria.