Helb unable to trace 25,000 defaulters of billions in student loans

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Helb CEO Charles Ringera said this has partly contributed to the cash shortage which has weakened its ability to support university freshmen and continuing students, prompting the agency to cut loan allocation.

The Higher Education Loans Board (Helb) cannot trace about 25,000 past beneficiaries, casting doubts on the agency’s ability to recover billions lent to students.

Helb chief executive officer Charles Ringera said this has partly contributed to the cash shortage which has weakened its ability to support university freshmen and continuing students, prompting the agency to cut loan allocation.

Those who benefit from Helb loans are expected to start repaying one year after completing studies.

The agency relies on employers to provide details of beneficiaries in their service, making it hard to trace those who do not find jobs or join the informal sector.

Auditor-General Edward Ouko in March said that Helb was unlikely to recover Sh24.6 billion from past beneficiaries. Another 70,000 beneficiaries whose details the agency has are holding about Sh11 billion. An outstanding balance of Sh2.5 billion is being held by diaspora beneficiaries.

Most university students come from poor backgrounds and require financial assistance to pay tuition fees and for their upkeep. The loans are given at an interest rate of four per cent per annum.

Helb has struggled to meet rising financial needs of students, especially those joining universities, due a funding shortfall which has continued to grow in the past five years.

READ: Ouko calls Helb out on recovery of Sh21.9bn loans

The loans agency in January last year cut the highest allocation per student to Sh50,000 from Sh60,000 per academic year for freshmen who joined university last year.

The board recently announced that it was phasing out internship loans to undergraduate students in the next two years due to lack of funds.
Past beneficiaries who fail to service their loans accrue penalties of Sh5,000 a month.

“Without this charge there is no way loanees will feel duty bound to pay up this loan, this will compromise the aspect of the revolving fund,” Mr Ringera said.

A sharp rise in the enrolment of students in public universities has continued to stretch the loans agency’s capacity to assist the large pool of needy applicants.

The number of students enrolled in universities grew 22.8 per cent last year, buoyed by the approval of new degree courses and the setting up of fresh campuses countrywide.