Loan defaulters owed the Higher Education Loans Board (Helb) Sh8.45 billion by end of February, highlighting the agency’s struggle in servicing new applications.
The agency told Parliament the amount reflects accounts that are yet to be settled beyond 10 years which is usually the period mature loans ought to have been cleared.
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.
The unpaid loans have grown from Sh6.7 billion in June 2020 to the current Sh8.45 billion, reflecting 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 majority of whom are from poor households and require financial support.
“Some have cited lack of jobs, others migrated out of the country but we continue to work with our embassies in view of following them out there,” said Mr Ringera told the National Assembly Public Investments Committee on Education and Governance (PICEG).
In the current financial year, the agency was allocated Sh14.8 billion to finance needy students and is supposed to supplement this with what it collects from former loanees.
The delayed exchequer disbursement has however made it hard for the Helb to finance students on time pushing beneficiaries, most of whom are first-years will have to find alternative means of paying for their tuition, accommodation and upkeep.
A successful loan applicant receives between Sh35,000 and Sh60,000 per year.
The agency said it lacks Sh5.7 billion to finance some 140,000 university and technical vocational college students in the current financial year.
Currently, beneficiaries start repayment one year after completing studies or risk blacklisting with credit reference bureaus for defaulting.
The short repayment period has been linked to the growing list of defaulters at the Helb.
Helb loan deductions are required to be remitted by the 15th day of every month with failure or delayed remittance, attracting a five percent penalty of the total amount due.
