President Uhuru Kenyatta rejects HELB Bill saying it is expensive to implement

President Uhuru Kenyatta has dimmed the hopes for financial security for thousands of university students when he rejected a Bill that forced the Higher Education Loans Board to give all government-sponsored students loans.

The President said it was expensive and discriminatory to make it mandatory for HELB to cater for "regular students" whereas all university students from poor backgrounds require access to the loans to pay their fees. He said HELB had a duty to "respect individual applicants" and vet their suitability for a loan.

"Giving preferential treatment to a category of applicants in the granting of loans is discriminatory and therefore unconstitutional. Even if the proposal were legally tenable, its sustainability would require substantial financial support from the National Treasury which is hardly feasible given the budgetary constraints," said the President.

In a memorandum to the National Assembly on the Higher Education Loans Board (amendment) Bill, 2015, the President also said that the push for minors to get the loan was wrong because majority of applicants for university loans are usually 18 years of age and above.

The Head of State also rejected the proposal requiring those who can't repay the loan to notify the board and swear an affidavit expressing their inability so that the loan does not earn interest. He said the Helb Act as it is right now requires applicants to start paying back within a year of completing their studies between 48 and 120 months depending on their nature and amount of the loan.

"The proposed amendment is clearly objectionable as it will, no doubt, weaken the board's loan recovery mechanism. This is because loanees will no longer feel pressured to complete their studies and enter into gainful employment so they can start servicing their loans," said the President in the 11-page memorandum to the lawmakers.

Students get between Sh35,000 and Sh60,000 for undergraduate students. The money is meant for tuition, books, stationery, accommodation in campus, and daily subsistence. Graduate students get Sh200,000 while those pursuing doctorates get Sh450,000.

When the sponsor of the Bill, Kiharu's Irungu Kang'ata moved the Bill in the House, he sought to suspend the four per cent annual interest rate charged on the loan until the students get a job or a way to pay back the money. If they don't, they have to swear an affidavit every year confirming their inability to pay.

"Failing to repay a loan is very punitive, because your name is taken to the Credit Reference Bureau... so they have to swear an affidavit every year that they have no job, so that they are exempted from paying interest on the loans," Irungu said in August when the Bill was approved.

But yesterday, the Head of State said it was wrong to push the MPs to make it HELB's job to find out whether the beneficiaries had a job or not. He said the business of loanees was to pay the loans as soon as they clear their studies.

"It will be extremely difficult for the board especially in cases where loanees are in the informal sector or are self-employed, or where they live and work outside the country and is likely to cost the Board a lot of valuable income," said President Kenyatta. "This state of affairs may also scare away alternative fund providers who might consider investing in the board too risky".