Relief for loan defaulters as Helb extends amnesty
Graduates at the Helb offices at Anniversary Towers in Nairobi ahead of Thursday’s loan repayment deadline. The fund’s CEO, Mr Charles Ringera, announced a month’s extension. Photo/Salaton Njau
What you need to know:
The Higher Education Loans Board (Helb) said the waiver of surcharges started on May 6 would now run until July 6.
Helb has been levying a Sh5,000 penalty for each month that a loan is not serviced from the time of maturity.
Kenya’s higher education financier has extended the window for beneficiaries to pay dues without penalties and interest by a month, targeting to raise another Sh340 million through the amnesty.
“The response has been good and we want to encourage graduates in all sectors to take advantage of the waiver,” Helb chief executive Charles Ringera said. The penalty amnesty was to come to an end on Thursday.
The agency had by Thursday afternoon collected more than Sh260 million, with the amount expected to reach Sh600 million after the extension. Loan defaulters are required to pay outstanding dues in lumpsum to avoid penalties.
Helb has been levying a Sh5,000 penalty for each month that a loan is not serviced from the time of maturity. Loans fall due when a beneficiary completes the course financed irrespective of whether they are in employment or not.
To broaden the options for payment, the board has partnered with several banks to extend loans to defaulters. Graduates will access loans from KCB, Ecobank, Faulu Kenya, Jamii Bora, Family Bank and National Bank at subsidised interest rates to repay the Helb loans.
However, applicants will be offered terms based on assessments by credit reference bureaus, with those considered a high risk paying more.
A market share war is looming as banks entice graduates to take up their products. Micro lender Faulu Kenya has set at 12 per cent the reference rate for the loans, compared to the 16 per cent it is charging for other loans.
“We seek to encourage as many graduates to come for our competitive product,” Faulu Kenya business manager Henry Ongulo said.
National Bank was mulling fixing its rate at 14 per cent down from a standard 19 per cent.
Helb also said it was seeking to partner with USAid toward raising Sh2 billion for the revolving fund. Meanwhile there were complaints among the graduates who wanted to clear their loans over the slow pace of the process.
Those located outside Nairobi were forced to travel to the city since Helb’s website had jammed, rendering it of little help.
Last year, Helb received 65,000 applications for funds but funded only 32,000 university students due to its small purse. It has also been unable to fund thousands of freshmen who reported last month at the University of Nairobi citing lack of funds.
The revolving fund has so far supported 375,783 students to the tune of Sh40.2 billion since its inception in the 1970s.
