Tertiary schools colluding with banks to shortchange student loan applicants – Govt

A probe has alleged unethical practices by some universities and banks in the disbursement of student loan funds.

The National Orientation Agency (NOA), through its community orientation and mobilisation officers (COMO), said some tertiary schools are suspected of conspiring with banks to unfairly disadvantage students who are beneficiaries of the loan scheme.

Lanre Issa-Onilu, the director general of the NOA, revealed these findings after meeting with Akintunde Sawyerr, the managing director of the National Student Loan Fund (NELFund).

In a statement on Sunday, Issa-Onilu said early indications suggest that university officials are withholding crucial information regarding the release of loan funds, prompting NELFund to take immediate action.

The NOA said specific institutions, working in collusion with certain banks, have deliberately delayed payments to successful student applicants for their financial gain.

It said some universities are failing to acknowledge the disbursements made by NELFund to the students.

Sawyerr confirmed these concerns at the meeting, stating that NELFund had discovered instances where institutions received student loan funds directly but failed to inform the students or properly record the payments.

“Recent findings by NELFund have shown that some institutions have received student loan disbursements directly into their accounts yet neglect to inform the affected students or record the payments in their financial records, leading to unnecessary confusion,” Sawyerr said.

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

Issa-Onilu warned the implicated institutions and collaborating banks, demanding an immediate end to such activities.

The NOA, he said, has also instructed its state directorates to gather further feedback from students across the country.

He said this is to enable the federal government to sanction any erring schools and banks.

President Bola Tinubu enacted an initial version of the student loan policy in June 2023 to grant interest-free loans to students.

The scheme was to commence in October 2023, but implementation was repeatedly deferred until a re-enactment in April 2024.

NELFund opened the loan application portal in May 2024, at which time a pilot phase to serve federal tertiary institutions began.

Reports indicate that some students have experienced delays in the disbursement of funds, even after being approved.

This has led to situations where students are nearing exam deadlines or new academic sessions without receiving their loans.

There have also been inconsistencies in the amounts disbursed compared to actual school fees, creating confusion about repayment obligations.

NELFund earlier threatened to sue institutions unexplainedly withholding disbursement information from student loan applicants.