.FG Uncovers Corruption in Student Loan Scheme: Schools and Banks Accused of Withholding Disbursed Funds

ABUJA, Nigeria — The Federal Government of Nigeria has revealed alarming unethical practices involving certain higher institutions and banks colluding to withhold or mismanage student loan funds, depriving eligible students of their rightful financial aid.

This revelation followed an investigation led by the National Orientation Agency (NOA), which exposed disturbing cases of exploitation and breach of trust within the disbursement process of the Federal Government Student Loan Fund.

Investigative Findings: A Systemic Breach of Trust

According to the Director General of the NOA, Mallam Lanre Issa-Onilu, the findings came through feedback from the agency’s Community Orientation and Mobilization Officers (COMO) deployed across the country.

“Recent investigations into the disbursement of the Federal Government Student Loan Fund have uncovered several unethical practices by some institutions of higher learning,” Issa-Onilu stated in a post on NOA’s official X (formerly Twitter) handle.

Key revelations from the investigation include:

Universities receiving loan funds on behalf of students and failing to notify the beneficiaries.
Schools demanding tuition payments from students, even after receiving funds disbursed by the Nigerian Education Loan Fund (NELFUND).
Collusion between some banks and institutions to delay or divert payments for personal financial gain.

Government Responds: Legal Action and Tightened Oversight

In response, the Federal Government has vowed to take legal action against any institution or financial body found culpable.

“Such actions are both unethical and a breach of the principles upon which NELFUND was founded,” said Issa-Onilu. “Legal action will be pursued against institutions engaging in such deceptive practices.”

The NOA has instructed its state directorates to intensify data collection from students and tertiary institutions nationwide. This effort aims to build a stronger case and ensure accountability at all levels of the loan administration process.

Additionally, the federal government has issued a stern warning to all schools and banks involved, calling for an immediate halt to all exploitative practices.

Background: The Student Loan Scheme

The Federal Government Student Loan Fund was established under the Students Loans (Access to Higher Education) Act, signed into law by President Bola Tinubu in June 2023.

Key objectives of the scheme include:

Providing interest-free loans to eligible Nigerian students
Expanding access to tertiary education, especially among financially disadvantaged youth
Promoting equal opportunity and social inclusion

Initially scheduled for rollout in October 2023, the implementation faced several delays and was re-enacted in April 2024, with the pilot phase launching in May 2024. The first phase covered students in federal tertiary institutions.

Implications of Mismanagement: Students at Risk

The NOA’s findings underscore the urgent need for greater transparency and institutional accountability. Many students, already grappling with rising tuition and living costs, are further burdened when funds meant to ease their struggles are withheld or diverted.

These unethical practices could:

Undermine trust in the student loan program
Delay academic progression for students unable to meet financial obligations
Jeopardize Nigeria’s education reform agenda

What’s Next: Strengthening the System

To prevent future abuse and restore public confidence, the government is expected to:

Enhance digital transparency tools for loan tracking and disbursement
Implement a centralized reporting platform for students to flag anomalies
Partner with anti-corruption agencies to prosecute offenders
Publish periodic audits and performance reviews of participating institutions

Mallam Issa-Onilu also emphasized the importance of ethical conduct by schools and banks, urging them to uphold the spirit of the student loan initiative.

“Our goal is to ensure that these loans reach the students who need them most,” he said. “We will not tolerate any actions that defeat that purpose.”

Conclusion

The Federal Government’s swift response to the NOA’s findings reaffirms its commitment to educational access, equity, and justice. While the student loan program holds immense promise for Nigerian youth, its success hinges on transparency, vigilance, and zero tolerance for exploitation.

As investigations continue, the spotlight is now firmly on tertiary institutions and financial institutions to clean up their processes or face the full wrath of the law