Varsity students face cash crunch after Helb budget cash falls short

University students face financial difficulties after the Treasury allocated the Higher Education Loans Board (Helb) Sh10.1 billion or half the amount the financier requires for the coming fiscal year.

Helb chief executive Charles Ringera said the agency had projected a Sh19 billion budget in the fiscal year starting July to cover financing for mid-level college students, learners in foreign universities, and adoption funding model based on the cost of university degree pursued.

The Sh10.1 billion allocation includes loans recoveries from past beneficiaries.

The current year allocation was Sh9.1 billion made up of Sh6.6 billion direct Treasury allocation funding and Sh2.5 billion from loan recoveries.

Loans to students in technical and vocational education and training (TVET) institutions is set to grow to Sh1.3 billion in the coming year from the current Sh900 million, Helb said, in line with the State’s plan to focus on producing skilled labour.

President Uhuru Kenyatta in October directed Helb to begin funding Kenyan students studying in universities outside the East African Community region.

READ: Uhuru opens up Helb to Kenyans studying abroad

Furthermore, the Universities Act now compels Helb to give loans based on the cost of courses, as opposed from the current flat rate, in a new regime known as differentiated unit cost.

“Implementing the differentiated unit cost would throw us off balance,” said Mr Ringera in an interview.

“We also plan to increase funding to technical colleges, and there is also a presidential directive to begin funding students in foreign universities.”

Helb’s targeted loan recoveries in the current fiscal year ending June 30, 2017 is Sh4.12 billion, according to Mr Ringera.

The Kenya Universities and Colleges Central Placement Service has announced that all the 88,929 candidates who scored between A and C+ in last year’s KCSE will get a place in public universities. This is 20 per cent more than the 74,389 students who sat their KCSE exams in 2015 and joined public universities last year.

University admission has grown from 67,790 students in 2015 and 53,010 in 2014, stretching Helb’s funding capacity.

The under-funding has prompted protests from students in recent years due to delays in disbursing the loans.

The delay means that students who report to university have to rely on other means to cater for their tuition, accommodation and upkeep as they await the government funding. The delay in funds has hit the freshmen particularly hard with the majority missing out on university accommodation.

The loans agency in 2015 also cut the highest allocation per student to Sh50,000 from Sh60,000 per academic year for freshmen who joined university last year. Most of the students come from poor backgrounds and require financial assistance to meet tuition fees and upkeep. Official data shows that public universities had to 512,924 students last year, up from 195,528 in 2012.

Demand now comes from 68 universities and 130 colleges. Mr Ringera reckons that Helb is only able to finance 30 per cent of the student population based on their vulnerability.

Helb has employed a number of strategies to boost recoveries including hiring debt collectors to go after loan cheats, amnesties, and blacklisting defaulters through credit reference bureaus.

The education financier said recoveries from bailiffs grew by nearly a fifth to hit Sh245 million in the fiscal period ended June 2016 from Sh210 a year earlier, when the plan to hire three debt collectors was piloted.

Auditor-General Edward Ouko said Helb was unlikely to recover Sh24.6 billion from past beneficiaries of loans, deepening the agency’s funding crisis and weakening its ability to support fresh students joining universities.