HIGHER EDUCATION LOANS BOARD
its active loan book. From the records provided by the next of kin HELB is also able to make insurance claims and sustain the fund.
defaulters.” Mr. Ringera says. In addition to sharing credit information, HELB is also leveraging on data from other government agencies that undertake statutory deductions including KRA, NSSF and NHIF. To further optimize on its own records HELB is also using data from new applicants to track older defaulters.
To tackle its challenge with the diaspora, HELB is working with the department of Immigration to capture data on Kenyans in the diaspora and reach out to them. HELB estimates that over Ksh. 3 billion is held by an estimated 25,000 to 35,000 Kenyans in the diaspora. “Most times we are not able to tell where most of the beneficiaries in the diaspora went to, in terms of mapping out the diaspora we are setting up a program with the department of immigrations to enable us use their records of exit and return to know where these people are. We also hope to use immigrations to send a reminder to the Kenyan diaspora every time they return home at the point of entry.” Mr. Ringera adds. LEGAL BACKING To enable HELB recover loans, the government passed the HELB Act in 1995 that established the Board, the act was later amended to place statutory obligations and penalties on both employed beneficiaries and their employers under section 15 and 16 of the act.
Of the 600,000 graduates we have funded 120,000 have fully repaid their loans amounting to about Ksh. 12 billion. There are about 136,000 people who are making monthly repayments to HELB while there are 220,000 students who are still in school.
Subsection 15 (1) (b) of the act is about the employed beneficiaries who are required to (b) ‘begin repayment of his/her loan together with any interest accrued thereon; (c) if he/she is in formal employment, to authorize his/her employer to deduct the loan repayment and to remit it to the Board in such a manner as the Board many direct. Subsection 16 (1) of the act applies to employers and states (a) Upon the employment of any loanee to inform the Board in writing within a period of three months of such employment: (b) Upon confirmation by the Board that such a person so employed is a loanee, to deduct from the wages or remuneration of the loanee, the amount of any loan such instructed by the Board Upon graduation the Board gives a one-year moratorium for beneficiaries before the loan is due for repayment after which a monthly repayment is to be made by the beneficiary.
Failure to make the repayment subjects the beneficiary to a monthly penalty of Ksh. 5000 per month. For employers who fail to comply with the law and requirements to make deductions on all employees who benefited from HELB loans, the law stipulates a monthly penalty of Ksh. 3000 per person. The penalty to employers cannot be passed on to employees. “We are alive to the fact that some employees may not disclose their HELB status, that’s why we are asking employers to demand HELB clearance from their employees or they can send us the list of their employees and we can verify it for them. The final measure is to list all accounts in default for over 10 years with the credit referencing bureaus which impacts on the individual’s eligibility for credit. This affects an individual’s credit profile. We are looking to leverage on credit information sharing to track defaulters. HELB will be part of one’s credit rating and we will extend this to telecoms and utility companies to get information on HELB loan
“Chances are that for new applicants some of their parents where beneficiaries of HELB, if so we need to know if their parents paid their HELB loans. Last year we had about 80,000 applications and each required 2 guarantors, that gives us access to over 160,000 people. From this new data base, we were able to match 30,000 of our 85,000 default accounts. 6,000 of those matched had never paid a single cent to HELB so we leveraged this data to go after them and request payment but we did not deny their children access to HELB loans.” Mr. Ringera adds. NEW FRONTIERS Though traditionally targeted at universities, HELB has now roped in other tertiary learning institutions that are under the supervision of county governments. The loans are handed out under the government’s program for Technical Vocational Education and Training (TVET). According to the board students from TVET institutions are less likely to default on their repayments and therefore represent a lower risk. So far HELB has rolled out the Afya Elimu Fund aimed at supporting healthcare support staff ranging from nurses, radiologist, lab technicians and biomedical engineers. The fund is a jointly funded by USAID at 40%, the Kenyan Government at 50% and HELB at 10%. The total fund currently stands at Ksh. 523 Million supporting over 9,500 healthcare works across various institutions. “Beneficiaries of TVET have a higher rate of loan repayment primarily because technical skills are in high demand, most graduates are still unemployed and even those that are earn low incomes in their first three years of employment. As a lender TVET is now a new frontier because of the ability and willingness to repay by those who benefited from the loans.” Mr. Ringera says. In addition to the demand for technical skills HELB credits the willingness for beneficiaries to repay the loans with some technical students starting to make their repayments while still in school. Though the segment holds great potential, HELB admits that it
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