Jobless university graduates to get Helb loans relief

University graduates who do not secure jobs within one year of graduation to enable them repay their State education loans will be spared penalties if MPs approve proposed changes to the Higher Education Loans Board (Helb) Act.

The graduates will be required by law to notify Helb in writing on the lack of a source of income a year after receiving their degrees or diplomas, upon which the board will not levy penalties on the loan.

Currently, defaulters, including those who notify the agency that they are unemployed, face an automatic Sh5,000 cumulative monthly fine.

Helb has at times waived the penalties at its discretion, but the amendments proposed by Kiharu MP Irungu Kangata seek to entrench the practice in law.

“Loanees who have not secured a source of income within one year of graduation shall notify the board in writing and the board shall not levy penalty on the loan,” the Higher Education Loans Board (Amendment) Bill, 2015, says.

The Bill further proposes to oblige the board to notify applicants upon processing their loan requests and to allow appeal for additional funds where necessary.

If MPs pass the Bill into law, students will be represented on the board of the higher education funding agency, which is currently governed by a team of 11 members headed by chairman David Wachira. Charles Ringera, the agency’s chief executive officer, is also the secretary to the board.

The Kiharu MP wants Section Four of Cap 213A of the Helb Act amended to include two student representatives on the board, one of who shall be from a public university and the other from a private university.

“Members of the board shall be elected by the student leaders on rotational basis from respective public and private universities and shall serve for a period not exceeding two years,” Mr Kangata proposes in his Bill.

The private members Bill, published on March 5, also seeks to amend Section 13 of the Helb Act to open the door to a student who is a minor and wishes to be considered for a higher education loan to apply through a parent or a guardian.

“Where a student is granted a higher education loan, the loan shall be transferred to the student’s name upon attaining the age of majority,” the Bill says.

Mr Kangata is also proposing changes to Section 14 of the existing law to oblige the board to notify applicants in writing whether their application for a loan has been accepted or rejected.

“A student may appeal against the decision of the board to reject his or her application for grant of a higher education loan, in writing addressed to the secretary of the board,” the Bill states.

The proposed changes come at a time when the Treasury has increased Helb’s budgetary allocation by Sh1.8 billion for the financial year starting July.

READ: Treasury raises Helb allocation by Sh1.8bn

Budget estimates released two weeks show that the government has set aside Sh7.5 billion for the fiscal year 2015/16 to sponsor students in universities, up from Sh5.7 billion in the current period. Helb recently said it needed more than Sh10 billion to meet the funding needs — a signal that the allocation would be inadequate.

More than 67,000 new students are set to join university this year, up from about 57,000 last year, increasing the demand for loans.

The Sh7.5 billion includes cash recovered from past loanees, meaning that the actual allocation from the Treasury is much lower. The loans agency said the Sh5.7 billion allocated last year was only enough to sponsor continuing students, excluding freshers.

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

Official data shows that both public and private universities had 443,783 students last year, up from 361,379 a year earlier and 218,628 in 2012. The number of university students stood at 62,000 in 2002.

Helb has widened its lending to students in private universities and Kenyan students in institutions based in Uganda, Tanzania and Rwanda.