Helb says it has recorded a surge in notifications from employers indicating retrenchments of their workers who benefited from the Helb cash.
The employers’ alerts effectively halt deductions on beneficiaries’ monthly payroll.
Corporate Kenya has recently witnessed a wave of job layoffs amid a tough economic climate.
Massive job cuts in the economy have seen beneficiaries of student loans stop repaying midway, reducing the capacity of government to fund learners from poor backgrounds.
The Higher Education Loans Board (Helb) said it has recorded a surge in notifications from employers indicating retrenchments of their workers who benefited from the Helb cash.
The employers’ alerts effectively halt deductions on beneficiaries’ monthly payroll.
“We received notifications from counties and employers of exit of service by some of the loanees hence inability to honour monthly deductions,” the board chief executive Charles Ringera said.
The Helb Act requires employers to notify the board within three months of employing a beneficiary of the fund and start deducting their salaries for remission to offset the loan.
Employers are fined Sh3,000 monthly for each defaulting employee while individual beneficiaries attract a Sh5,000 fine.
The student financier relies on loan recoveries and government capitation to fund new and continuing students.
A dip in recoveries due to defaults as the economy takes a hit means some poor students could miss out on this critical funding which pays for tuition and accommodation.
The Treasury allocated Helb Sh10.1 billion this financial year, half the amount it requires, including loan recoveries.
The agency recovered Sh4.1 billion last financial year ending June, up from Sh3.9 billion a year earlier.
Layoffs
Corporate Kenya has recently witnessed a wave of job layoffs amid a tough economic climate.
Last month’s election, which saw new county leaders elected, has also resulted in job losses.
“Retrenchment and suspension of staff members at the county governments is worrying too,” said Mr Ringera.
Public service jobs require applicants to obtain compliance certificates from Helb.
Several banks have sent staff home and some have closed their branches across the country amid the rise in online banking and thinned margins in the wake of the law capping interest rates.
The lenders include Bank of Africa Kenya, Standard Chartered #ticker:SCBK, Ecobank, Family Bank, Sidian, and Islamic financier First Community Bank.
Samsung this month also downgraded its Nairobi regional office in a major operational shake-up that is likely to result in job losses.
The prolonged elections have further dampened the country’s economic prospects.
The country is set to hold a repeat poll in October 26 after the Supreme Court nullified the results of an August 8 presidential election citing irregularities in the tallying process.
Kenya lowered its 2017 economic growth forecast to 5.5 per cent due to drought and political uncertainty. The government’s revenue collection for the year starting July is behind target by Sh29 billion.
Helb has 85,000 loan defaulters owing Sh9.6 billion.
So far a total of 169,909 graduates have fully repaid their loans worth Sh13.2 billion while some 136,783 beneficiaries are servicing loans worth Sh20.7 billion.
The various advertisements by counties to fill in various positions has made a fresh surge on compliance certificates required by the Public Service Boards.
“We have witnessed very hardcore old debts being paid-off as ex-loanees chase for CEC and Chief Officer’s jobs in the counties,” said Mr Ringera.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
