Why Uhuru rejected new amendments to Helb law


Student loan beneficiaries at Helb offices in Nairobi. FILE PHOTO | NMG

A clause that sought to exempt beneficiaries of the Higher Education Loans Board (HELB) from repaying their loans until they secure jobs prompted President Uhuru Kenyatta to reject a new amendment to the law.

The Helb Amendment Bill, 2020 proposed that beneficiaries would start repaying their loans when they secure jobs in changes that sought to save millions of unemployed graduates from monthly fines.

Mr Kenyatta said the changes would hit the Helb funding pool and lead to a reduction in the number of beneficiaries.

Helb beneficiaries are required to start repaying the loans within a year of completing their studies. They are charged Sh5, 000 for every month they default.

The head of State added that beneficiaries of Helb who are self-employed would not declare they are in income-generating activities in a bid to delay repayment of the loans.

“This provision will adversely affect the sustainability of the Higher Education Loans Board as a revolving fund. Delaying the date of commencement of repayment of student loans will consequently reduce the amount recovered by Helb,” said Mr Kenyatta in his memorandum to Parliament on Tuesday.

“Further the proposed amendment will preclude loanees who have completed their studies or those who are self-employed from repaying their loans promptly.”

Helb is supposed to be a revolving fund in which beneficiaries who have completed studies pay back the loans to support a fresh group of students.

This has, however, not been the case in an economic setting that is plagued by a hiring freeze on the back of sluggish corporate earnings.

Millions of graduates are jobless exposing them to the monthly fine for defaulting on their Helb loan repayment.

Helb is currently grappling with a high number of beneficiaries who have defaulted on their loans hurting the ability of the kitty to support other students.

Official data shows that Helb loan accounts in default increased to 109,661 in March from the 106,443 recorded in December 2020, with unpaid loans standing at Sh10.9 billion.

This highlights the struggle faced by beneficiaries who were making repayments on the strength of their payslips or cash flow from businesses for those in self-employment.

The mounting defaults have weakened Helb’s ability to support university and technical college students, prompting allocation cuts that saw more than 75,000 university freshmen fail to get State loans after their admission in September.

The majority of loan applicants come from poor households and require financial support from Helb to pay for their tuition and upkeep.

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