How Schools Are Colluding with Banks to Shortchange Student Loan Beneficiaries – FG

The federal government has raised alarm over alleged collusion between some tertiary institutions and banks to undermine the newly launched student loan scheme, accusing them of unethical conduct aimed at shortchanging student beneficiaries.

According to the National Orientation Agency (NOA), early findings gathered through its community orientation and mobilisation officers (COMO) suggest that several universities are deliberately withholding vital information about loan disbursements, while some banks are complicit in delaying payments to approved applicants.

Lanre Issa-Onilu, Director General of the NOA, disclosed the findings following a meeting with Akintunde Sawyerr, Managing Director of the National Student Loan Fund (NELFund). In a statement issued Sunday, Issa-Onilu described the situation as a disturbing breach of trust that undermines the goals of the student loan programme.

The NOA said certain institutions had received loan payments from NELFund but failed to inform students or reflect the disbursements in their financial records. In some cases, this has led to confusion and hardship for students who were unaware that funds meant for their fees had been released.

Sawyerr confirmed these irregularities, stating that NELFund had documented multiple instances of universities receiving student loan funds into their accounts and not notifying the recipients. He warned that such conduct is a direct violation of the fund’s mandate and would not be tolerated.

“Withholding critical financial information from students is not only unethical but also a breach of the principles on which NELFund was founded,” Sawyerr said. “We are prepared to take legal action against any institution engaged in such deceptive practices.”

Issa-Onilu echoed this stance, calling on all involved institutions and banks to cease these practices immediately. He said the NOA has directed its state offices to collect more feedback from students nationwide, in order to aid the federal government in identifying and sanctioning erring institutions.

President Bola Tinubu initially signed the student loan bill into law in June 2023, with the aim of providing interest-free loans to students in tertiary institutions. While the scheme was originally set to launch in October 2023, it was delayed and re-enacted in April 2024, with a pilot phase kicking off in May 2024 for students in federal tertiary institutions.

Despite the rollout, many students have reported delays in accessing approved funds, some of which have jeopardized their ability to meet deadlines for exams or school fee payments. There have also been inconsistencies in disbursement amounts, creating further confusion about what students owe and how repayment will be structured.

NELFund had previously warned it would pursue legal action against institutions that withhold disbursement information from student loan recipients without justification.