Varsity loans crisis looms as Treasury delays funds release

More than 50,000 students joining university this year will go for nearly two months without government sponsorship following delays in disbursing higher education loan funds by the Treasury.

Higher Education Loans Board (Helb), the agency charged with disbursing the loans to students, Thursday said the Treasury had indicated that the extra funds needed to fully finance the scheme would be released in November.

Helb last month applied for additional Sh2 billion from the Treasury, saying the money is needed to avert a looming funding crisis.

The student loans agency says that with the additional Sh2 billion it will be able to finance new and continuing students but the earliest that could happen is in November.

That means freshmen, who are expected to begin their studies in September will have a tough time settling on campus without the funds to register for courses and for personal upkeep.

“We will start receiving loan applications next month, process them in October and disburse the funds in November,” said Charles Ringera, the Helb chief executive officer.

Mr Ringera said that the agency had, under the supplementary budget 2, applied for Sh2 billion and that processing of the same was at an advanced stage.

Freshmen in public universities pay tuition fees of between Sh30,000 and Sh45,000 for the first year. The money also covers medical, registration, activity and computer lab fees.

It does not, however, include meals, housing and personal upkeep, which are critical to the survival on campus for thousands of needy students.
University hostels charge students on average Sh3,000 per semester while private hostels charge as much as Sh7,000 per semester.

With university admissions hitting record highs, accommodation has become difficult to get in many universities especially because the few available spaces on campus are allocated on admission day to those who are ready to pay for it.

READ: Helb to raise varsity loans ceiling in World Bank deal

Kenyatta University last year admitted students on September 9 while Maseno University admitted its lot a week earlier, making disbursement of funds in November a two-month wait.

Maseno University has put up a notice warning students (continuing and new) that failure to pay fees may get them locked out of classes and hostels.

“All students are expected to pay full fees on registration. Accommodation will be on first-come-first-served basis, upon full payment of university fees,” reads the university circular.

Helb is expected to open a three-month-long loan application process in August for both continuing and new students.

Freshmen will begin applying once they receive letters from the respective universities from the Kenya Universities and Colleges Central Placement Service.

The placement service is expected to complete the selection exercise in the next two weeks, making mid-August the probable date for the posting of admission letters.

Upon receiving the letters, the freshmen can then apply for Helb loans and wait to receive the money in November.

Helb on Thursday sought to downplay the significance of the funds delay arguing that the information will be communicated in good time to the universities and financiers of the students.

ALSO READ: Funding crisis as nearly 60,000 join public universities

Helb’s funding problems began in May this year after budget estimates showed that the Treasury had allocated only Sh5.7 billion for loans to students in public universities.

Helb contributed Sh2.4 billion from funds recovered from past loanees while the Treasury is contributing Sh3.34 billion.

Helb said the money was not enough, arguing it needs more than Sh6 billion to finance second, third and fourth year students each year.

“Our estimate is that we will approve 70,000 new applications this year and that these students will require Sh2.4 billion in loans,” said Mr Ringera, adding that this “is the funding deficit the agency will soon be facing.”

The board’s updated financial report indicates that the government has allocated it Sh3.8 billion for the current financial year, which combined with the Sh3 billion it has recovered from past loanees adds up to a total of Sh6.8 billion.

That should have been more than enough had expenses on students not shot up to Sh8.1 billion.

The total is made up of Sh6.1 billion needed to finance continuing students and at least Sh2 billion required to fund freshmen (both in universities and colleges).

This leaves a Sh1.3 billion deficit that forced Helb to seek extra funds from the Treasury even as it explores alternative options from lenders such as the World Bank.

This is not the first time the freshmen will do without Helb loans in the first couple of months at university.

Last year, a delay in admissions precipitated a similar crisis as most students had not received their letters by August 27, just four days to the loan application deadline.

Helb announced that only 1,000 students out of the expected 50,000 had applied for financial assistance by the set deadline.