Fighting to get out from under Helb debt trap

Odera Kodera pays his tuition loan whenever he can. Since he graduated from Moi University with a degree in Economics in 2015, Odera has never landed a stable source of income.

Instead, he relies on online jobs and offers consultancy on tax matters. He says the jobs are not easy to come by. Kodera is worried that his debt at Higher Education Loans Board (Helb) is increasing every month that he fails to pay.

His woes do not end there. The debt has also locked him out of opportunities to get gainful employment. In 2017, for instance, he helplessly watched a government job pass him.

“It was a statistics job I was assured to get at the Kenya National Bureau of Statistics. All that stood between the position and me was mandatory clearance certificates from government agencies. I did well in all requirements but lost my chance after Helb declined to clear me,” says Kodera.

By then, Kodera who offered private tuition to an accounting student could only afford to pay Sh500 every month.

“There is a time I could manage to pay Helb Sh500 from the Sh5,000 I managed to get every month. But when I needed clearance from them, they told me the amount was too little. I left without the clearance certificate and submitted an application without the mandatory document,” he says.

“Essentially, Helb is a noble idea that helps students from poor backgrounds access higher education. But subjecting beneficiaries to penalties, almost immediately, after they graduate is unfair,” says Kodera.

He says the monthly penalties result into huge amounts that further discourage hopeless graduates. According to Helb, 70,008 students who benefitted from Helb loan have not started repaying their debt amounting to Sh6.8 billion, even after their loans matured for repayment.

Pauline Suter, who graduated at Kenyatta University in 2008, says a majority of graduates take long before they land jobs, a period within which their loans accumulate to high figures.

It took Suter nine months before she landed her first job, which was a few-months-contract job. From this, she started repaying her loan. Suter received Helb funding for five years in university. What she paid, she says, was only a drop in the ocean.

“From my contract job, I was only able to pay Sh1,000 per month which was nothing compared to the hundreds of thousands I owed Helb. Within no time, the contract ended and I stopped paying,” she says.

Suter has never been employed since. After many years, she started doing small businesses and resumed repaying her loan that had accumulated to Sh732,000. When her business eventually picked up, she saved enough money to clear the loan lump sum. She negotiated with Helb who agreed to discount the amount she owed to Sh500,000, an amount she cleared at once.

“Clearing Helb loan isn’t easy, especially when one depends only on brief contract jobs that don’t pay well. One time you are paying, the next time you can’t afford to pay and the loan keeps accumulating,” says Suter.

David Kariuki graduated from the Catholic University of Eastern Africa in 2006. He used to receive Sh35,000 Helb loan (annually) and an additional Sh8,000 bursary from the student financier since he came from a poor background. He was also a beneficiary of the university’s Sh20,000 bursary that supported needy students.

Kariuki spent some time on the streets, away from his struggling family of 12 siblings, who never made it to college, based at a city slum. He was rescued by city-based Mulli Children’s Home that also sponsored his education up to university-level where he studied Sociology.

Cast into cycle of debt

When he graduated, he was cast into the world of joblessness with a Sh300,000 Helb debt on his back.

“The debt was a huge burden for me and it kept me from accomplishing my dreams. I had intended to take another loan and proceed with my masters but without a job, I had no way of settling the debt. It took me long to start repaying the loan,” says Kariuki.

With no home to go to, Kariuki says he moved in with a friend who gave him space to start poultry farming. It was from the profit he made that he started repaying his loan. It took him two years before he began repaying the loan. Even then, the little he paid every month took too long to offset his debt. He decided to accumulate money and repay the loan at once.

 “I gathered enough money and teamed up with friends to buy a piece of land. We later re-sold the land at a profit. I used my cut to clear my debt at once,” says Kariuki.

Now free of Helb debt and having sponsored his own Master’s degree, Kariuki says Helb loans hold graduates hostage.

“We can become slaves of the loan. I have friends I graduated with in 2006 who have never been able to move at all. Some have even changed their careers to avoid using their KRA details,” he says.

Last month, immediate former Education Cabinet Secretary Amina Mohamed said defaulters would be tracked through their workstations. She said the ministry would use all available avenues, including digging into defaulters’ mobile money transactions, to seize them.

“We hope that by doing so, we will increase the resources that are available to Helb to support others. We want them to become reliable and responsible citizens by repaying their debts,” she said.

Speaking to Hashtag, Helb CEO Charles Ringera says the mandate of the board was to recover all outstanding university loans given to Kenyan students since 1974.

He says the law provides for stringent measures against defaulters. “To ensure compliance, Helb Act under Section 15 (1) stipulates that loanees who default on loan repayment, including those who are employed, shall be guilty of an offence and liable to a fine [penalty] of not less than five thousand shillings per month in respect of each loan deduction that remains unpaid,” says Ringera.

He adds: “This is in addition to any other action that the Board may take against the defaulter such as negative listing on CRB or outsourcing to debt collectors.”

Of note, according to Ringera, is that graduates who feel weighed down by debt are welcome for negotiations at the Helb offices.

“It is important to remember that Helb listens. Come and talk to us so that we can agree on a minimum reasonable rate that will reduce your outstanding loan and help you finish your loan repayment,” says Ringera.

He adds that the board only punishes defaulters who choose to remain silent about their situation.

“Penalties are levied as per the Helb Act due to non-communication and commitment to repayments. Constant communication and full disclosure on self-employment or type of employment by the loanee, therefore, is key to negotiating and coming up with an amicable solution,” he says.

Ringera says penalties are not levied for the beneficiaries under mandatory internship for a specified internship period. He says loanees in the disciplined forces and those who are under the specified training duration are also exempted from penalties as will be guided from time to time.

Additionally, students who defer their courses due to illness and notify the board on the same are not penalised. 

Drya Susan who graduated with a degree in nutrition and dietetics from Kenyatta University took advantage of these exemptions. “I presented myself to Helb the first time I got a job and immediately started repaying my loan. And when I lost my job I also made sure to notify them. They listened to me and exempted me from fines. When I got another job, I went back to their offices and told them I was ready to resume paying the loan. It was a journey but I cleared the debt.  Helb, in my view, is not the monster people are creating it to be,” says Drya.

Helb is currently funding students in 78 public and private universities. Seventy-four of these are in Kenya and four are in East Africa Community countries. According to the Helb boss, the student financier is also funding students in over 130 technical training Institutions under the technical and vocational education and training program.

Kodera said no student willingly decides to avoid repaying his or her loans. “Defaulting Helb is simply a question of unemployment. No graduate enjoys denying other deserving students that same privilege. Nevertheless, it is impossible to repay any loan when you simply cannot even feed yourself. Government should concentrate on job creation as a solution to loan defaulting too,” he says.

Moreover, Joseph Sosi, who graduated in 2017, and is yet to start repaying his loan says the high interest rates levied by Helb are restrictive.

“Helb is essentially meant to help one go through their higher education smoothly. I cleared from college in December 2017 and keen to repay starting May. My only concern is the interest rates. Why does the government want to make money from helping young people get a degree that’s otherwise not translating to employment as many would expect? Helb should do away with the interest. We need a waiver on all outstanding loans,” Sosi argues.

Being proactive pays

Desmond Walker started repaying his tuition loan even before he completed his studies. He used to receive Sh40,000 from Higher Education Loans Board to fund his four-year course at the University of Nairobi.

Added to the interest the board charged, the amount had accumulated to Sh215,000. Last year as he prepared to sit his final exams, he landed an internship opportunity at Africa Youth Trust, an advocacy organisation where his monthly stipend is Sh25,000.

Out of this, he sets aside Sh5,000 to slice off his loan. He says it is the best decision he ever made.

“I decided to start repaying the loan as soon as I could to stop it from accumulating. The loan accumulates so fast and locks graduates out of many opportunities. I have applied for government jobs and seen applicants locked out of interviews because they didn’t have some sort of clearance with Helb,” says Desmond.

He says he started repaying the loan early to stop the Sh5,000 monthly penalties that defaulters are subjected to.

The political science student says most graduates get discouraged from repaying their Helb loans when they accumulate to huge amounts.