It is noteworthy that a nominated Member of Parliament has sponsored a law change that is expected to reduce the interest charged on Higher Education Loans Board borrowing to two percent. This cheaper funding targets women and people living with disability.
Whereas this promises a reprieve for the disadvantaged groups, should the bill become law, the interest income will drop by more the Sh500 million annually.
This will effectively put a bigger strain on Helb, which has been charging rates of four percent and giving the beneficiaries a year to start repayments. Indeed, Helb has, for years, been struggling with funding, pushing it to consider arresting defaulters.
At four percent, the loan was already affordable, however, because the bulk of students at public universities are from poor backgrounds and also take long to secure jobs, the plan to halve the charges is tenable and is worth considering. For it to work, though, the Board should ensure that the costs tied to running the fund are kept low, so that the reduction does not end up exciting the public while the loans agency ends up grounded.
One of the ways of doing this is using technology, such that staff costs will be bearable.
Helb beneficiaries should also commit to repayments immediately they secure any form of employment, such that Helb will not spend millions of shillings looking for defaulters. Such costs would be unnecessary and avoidable were the beneficiaries to honour the deal with the State to fund their education at reasonable costs.
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Note: The results are not exact but very close to the actual.
