Look for smart ways to recover HELB loans, threats don't work

The Higher Education Loans Board (HELB), established by an Act of Parliament in 1995, sought to provide financial help to university students through loans and scholarships, both locally and internationally.

The introduction of cost sharing in education stood to disadvantage students from humble backgrounds, which was why it was necessary to cushion eligible students against dropping out of university because of lack of fees through the creation of HELB. While the original intention was noble, the execution came with its challenges.

One of the challenges is an effective recovery method. To date, Education Cabinet Secretary Amina Mohamed has stated that HELB is owed Sh7.2 billion by university graduates who have defaulted, some for as long as ten years. A few cases like the attack on Garissa University in 2015 in which 147 students were killed led to HELB losing at least Sh10 million. Death through natural attrition has also denied HELB some money yet, as a revolving fund required to serve the ever increasing number of students joining institutions of higher learning, HELB must be liquid to fulfill its obligations.

While HELB's overall operational budget is Sh11.4 billion, an outstanding loan of Sh7.2 billion is likely to hamper its operations and disadvantage new students seeking loans. Faced with this prospect, the Ministry of Education has partnered with law enforcement agencies to track down defaulters. This move has been greeted with public outrage. HELB’s dilemma is understandable, but clearly, the solution is not arresting defaulters, whether the target is simply those already in employment or any beneficiary who has since left university, but is yet to fully repay the loan.

Admittedly, some of the graduates have been in employment for some years now, but deliberately chose not to repay their HELB loans. This breach of contract impacts negatively on the effectiveness of HELB in aiding needy students. Delays in disbursement of loans due to unavailability of funds have resulted in student riots. Unemployment levels among youth joining the job market stands at 75 per cent, demonstrating that university graduates do not have the wherewithal to repay what they owe. It behooves the government to seek better recovery methods and at the same time, tackle the growing problem of youth unemployment if those who owe HELB money are to pay back.

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Higher Education Loans BoardHELBHelb defauters