Helb loan collections hit Sh3.3 billion in record growth

Recoveries by the Higher Education Loans Board (Helb) from past university students rose by a third in the year to June after the agency tightened the noose on defaulters.

Helb said it collected Sh3.3 billion this year, up from Sh2.5 billion last year, with the 30.9 per cent growth being the fastest in a decade.

The additional cash could ease the financing crunch at the loan agency given that a significant share of students were hit by delayed disbursements, with some receiving only a share of what they needed from Helb.

Helb CEO Charles Ringera attributed the increase in the recovery to aggressive pursuit of past beneficiaries including threats of court action and a waiver of penalties.

The rising need for clearance certificates from Helb for those seeking employment, especially in State agencies, has prompted past students to settle their dues.

READ: Helb recovers 7pc defaulted loans in two-month amnesty

“The recoveries were buoyed by netting defaulters to repay their loans and the two-month amnesty window which encouraged more graduates to service past-due loans,” said Mr Ringera.

Growth

“We also benefited from the constitutional provision on integrity which saw those seeking elective and other appointive public offices clear their loans as a requirement to participate in the General Election or be vetted.”

This is the fastest growth in loan recovery registered by Helb in the last decade, and a trend that will ease the fund’s reliance on grants from the Treasury.

Helb data shows that average monthly loan recovery grew to Sh275 million in the year to June, up from Sh210 million the previous year.

Helb has been allocated Sh4.9 billion for the year ending next June, falling short of the Sh14.4 billion the agency was looking for to meet needs of the growing number of university students. Demand for Helb loans has increased sharply due to the double-intake policy in public universities and the creation of new varsities.

Public universities admitted a total of 53,010 freshmen this year, compared to 24,221 in 2010.

Aggressive

Helb’s problems were compounded by the government’s extension of the loan programme to needy students in self-sponsored programmes in public universities in 2008.

Previously, the facility was only available to students admitted to public universities through the Joint Admissions Board (Jab).

Helb’s aggressive pursuit of defaulters has seen it track defaulters via statutory agencies like Kenya Revenue Authority (KRA), National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF). Employers are fined Sh3,000 per month for each defaulting employee and Sh5,000 on those not servicing loans after the one-year grace period offered after graduation.

Besides the hefty fines, Helb has also hired debt collectors and prosecutors to track down, prosecute and recover the Sh8.3 billion owed to the financier by defaulters.
The revolving fund, established in 1995, has so far disbursed Sh40.2 billion to 375,783 students.

Only a fifth of loan recipients or 68,522 graduates have fully repaid their loans worth Sh6 billion.

Some Sh12.1 billion disbursed to 133,569 students has not matured while 98,194 beneficiaries are currently servicing loans amounting to Sh13.6 billion, translating to a performance rate of 62 per cent.