President Uhuru Kenyatta last week rejected a new amendment to the law governing the Higher Education Loans Board (Helb), which sought to make various changes to how tertiary education will be funded in the future.
One of the main contentious issues of the Helb Amendment Bill, 2020 was the blanket exemption of Helb beneficiaries from repaying their loans until they secure jobs.
Though the soundness of the proposal is not in question as it sought to save millions of unemployed graduates from monthly fines, it would have hit hard at Helb’s funding pool and in return hurt its financial stability.
In rejecting the new law, the head of State argues 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.
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.
Helb is currently grappling with a high number of beneficiaries who have defaulted on their loans, hurting the ability of the agency to fund 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.
The mounting defaults have weakened Helb’s ability to support the 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.
Since the majority of loan applicants come from poor households and require financial support from Helb to pay for their tuition and upkeep, any changes to the law mustn’t kill the institution.
This would deny future generations access to tertiary education.
It is possible to shield jobless university graduates from penalties and at the same time find those earning some income, even as self-employed, to repay their loans.
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