Board intensifies loan recovery through strategic partnerships

By Frankline Sunday

If you haven’t paid up your student loan, you could soon be getting a friend request on Facebook from the Higher Education Loans Board (Helb).

This will be followed by an inbox message asking you to pay up your loan. As part of the measures to recover money owed to it by university graduates in the country, Helb is taking the recovery fight to social media.

It wants to engage past beneficiaries to have them repay the money. Mr Charles Ringera, the newly appointed Helb chief executive officer and Board Secretary upon assuming office says Helb needs its money back.

“According to the new Universities Bill, Helb, it is the duty of government to finance anyone taking up higher education, whether they are studying at a local institution or internationally,” he says.

“As the chief financier of higher education, Helb is supposed to finance students in universities and in all tertiary colleges including Technical, Industrial, Vocational and Entrepreneurship Training institutions, (Tivets).”

More universities

Aside from the already existing institutions, President Kibaki recently gave out eight more charters, increasing the number of public universities to 22. Helb now has to finance the educational needs of students in 60 public and private universities and 48 Tivets spread across the country with the number increasing especially in the new dispensation.

“We have a total of 118,000 students in universities and a further 100,000 in Tivets and we expect that this number will hit a total of 269,000 students be next year and we will require 14.8 billion to finance their education.” It is with these figures that the loans board justifies an aggressive recovery system it has adopted over the last two years that has had many unemployed graduates crying foul.

Sylvia Chebet is one such graduate. When she graduated from the University with a degree in Information Technology, Sylvia found herself at home, armed with a degree certificate and owing Helb Sh220, 000 in student loans. At the time, she did not think much of it because the Loans Board had given her a one-year grace period to repay.

She was optimistic she would be able to get a job before then. However, two and a half years down the line, Sylvia is still unemployed.

She currently owes the Loans Board Sh288,000 in accrued interest and penalties. “I got a temporary job and started paying Sh2,500 each month but when my contract ended after nine months I had to stop and that’s when the fines started coming,” she explains.  Her attempts to have the fines stopped on account of her being unemployed fell on deaf ears. She was forced to turn to her parents to help her meet the payments.

“The Loans Board informed me that I cannot evade the fines and the best way out is to remit some money however small,” she recalls. “I talked to my parents and they agreed to deposit Sh1,000 into my Helb account until I get a steady job and pick up with the payments.”

Sylvia is just one of the thousands of university graduates who are unemployed and yet are expected to start paying up their student loans to the key higher education financier, the Higher Education Loans Board, Helb.

Failure to pay up after the one year period has lapsed attracts a non-negotiable Sh5,000 penalty as Helb needs the money to provide loans to an increasing number of university students.  With the country’s unemployment rate at 40 per cent, more graduates are finding themselves at home jobless, yet their student debt keeps piling up.

“We understand the challenges that we have in this country in terms of employment but we need our graduates to understand that we need to move away from the perception that formal employment is the only form of employment that can be considered for recovery,” states Ringera. 

“We have graduates working small businesses or helping out in family farms and businesses so it is not correct to assume that one is entirely without a source of income.”  What we have been asking of them is they keep us updated of where they are and what they are doing and whatever small money they make they need to set aside some small amount to start paying off their debt.” This is important as the loans body is expected to wean itself off the money that it gets from the Treasury.  A huge undertaking considering the fact that allocation from the Treasury makes up a huge part of the revolving fund. “Last year, we recovered Sh2.5 billion from past loanees and Treasury gave us Sh2.1 billion. This year, we are targeting a recovery of Sh3 billion and we have applied for Sh14.8 billion,” explains Ringera

By 2030, Helb is going to require Sh413 billion to support 3.4 million students in technical colleges and universities. Ringera and his team are looking towards other financing options.

Financing options

Already, the loans Board is in partnership with the Commercial Bank of Africa, National Bank and KCB, where post-graduate students can get financing for masters and PhD studies at 12 per cent interest. “We want to create more partnerships of the same with all the banks in the country that are willing to partner with us on the premise that this is a low risk product and one that is in high demand,” said Ringera.

In addition, Helb is also looking to have the law amended to allow it tap into special funds like the unclaimed assets funds, deposit protection fund and the investor compensation fund. 

“The Deposit Protection Fund has a capital fund base of Sh40 billion and the Unclaimed Assets Fund has a capital base of more than Sh200 billion,” he states. 

“Is there a way the Law can be changed to ensure such funds work for social good of the country where they  give a percentage of the money to Helb repayable at one per cent interest?”