Helb should get smarter in student loan recovery

This is clearly not sustainable as formal jobs stagnate or shrink while more graduates continue to default even as they make a living in the informal sector.

The latest data from Helb shows that a cumulative 109,661 beneficiaries have defaulted on their loans amounting to Sh10.9 billion, with the crisis blamed on job losses brought by the Covid-19 pandemic.

It should not be the case that a beneficiary only repays his or her loan when employed in the formal sector.

There is growing evidence that more graduates are running their own businesses or are employed in the informal sector which has lower compliance with regard to Helb loan repayments as well as payment of taxes.

It is time that Helb worked closely with other government agencies to ensure that beneficiaries with outstanding loans continue to repay as long as they are earning an income.

There is now a wealth of information about citizens held by various agencies and departments and this should be used, within the law, to boost Helb collections.

Such intelligence gathering and enforcement actions should be modelled on the activities of the Kenya Revenue Authority (KRA) in enhancing tax compliance.

By scouring through data held by the KRA, Kenya Power and the National Transport and Safety Authority (NTSA), for instance, information may be gathered about defaulters’ business transactions.

Helb should also continue to encourage voluntary loan repayments, allowing beneficiaries to come up with a repayment plan and possibly waive penalties for such individuals.

Taking action to enforce collection beyond the formal sector will prevent the agency from sinking deeper into a financial crisis that threatens its viability.

Helb is designed as revolving fund where earlier beneficiaries repay their loans and the funds are used to sponsor a new group of students. It should remain so.