Higher Education Loans Board CEO Charles Ringera. PHOTO | ROBERT NGUGI
What you need to know:
CEO Charles Ringera says move will cover organisation against risk of defaults by students who have received loans.
According to Helb data, about 70,000 past beneficiaries of the loans are holding up to Sh11 billion while the whereabouts of about 25,000 other borrowers are unknown.
The Higher Education Loans Board (Helb) has turned to insurance firms for a product to cushion itself against defaults as the stock of bad debts in its books hits Sh11 billion.
Chief executive officer Charles Ringera said the insurance policy sought would henceforth cover the prganisation against the risk of defaults by every undergraduate advanced loans.
The board currently extends loans to students from poor backgrounds for an annual interest rate of four per cent on assumption that they can secure jobs one year after graduation to begin repayment.
“For the postgraduate students, we can recover the loans in case of death from the insurance but for undergraduates it is hard. That is why we are working on an insurance policy for undergraduates so that we can still recover our money in case of unfortunate incidents,” said Mr Ringera.
According to Helb data, about 70,000 past beneficiaries of the loans are holding up to Sh11 billion while the whereabouts of about 25,000 other borrowers are unknown.
An outstanding balance of Sh2.5 billion is being held by diaspora beneficiaries. Helb expects its stock of bad loans to grow sharply following Al-Shabaab’s terrorist attack on Garissa University College last year, which killed 147 students, most of them on government sponsorship.
On Thursday, the board signed a partnership with Credit Info CRB Kenya Limited as it moves to incorporate debt profiles of postgraduate students in its loan assessment tool.
Credit Info joins Metropoli and Trans Union, which have been doing credit reference services for Helb since 2013.
Postgraduate students seeking Helb loans will only qualify if they have the right credit scores. Credit Info chief executive Daniel Kanyi said the initiative will help in tracking down defaulters at all level.
“The exercise will improve access to credit and promote responsible lending through the application of effective risk management practices,” said Mr Kanyi.
Mr Ringera also announced that Helb had stepped up the inspection of corporate entities to ensure that staff that benefited from its loans repay them.
He also disclosed that retiring staff would be compelled to produce a clearance certificate from Helb before they get their benefits.
“We are very serious about this; we will fine any corporate which fails to submit employee repayments Sh3,000 per month and Sh5,000 per employee,” said Mr Ringera.
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