By Edna Mwende
The Higher Education Loans Board (HELB) risks losing approximately Ksh. 543.5 million if amendments proposed to the HELB Act are adopted by Members of Parliament (MPs).
The deficit as projected by the Parliamentary Budget Office (PBO) will be as a result of the proposal to set the interest rate cap for HELB loans at two percent down from four percent.
According to a news report by Business Daily, nominated MP Gideon Keter who has sponsored the proposed Bill said that: “The aim of these proposals is to reduce the financial burden on recent graduates who are to pay large sums to the Higher Education Loans Board even before securing employment or becoming financially stable.”
The Business Daily news report further points out that according to the PBO, the interest income may be further reduced depending on the number of youth, women and disabled persons who benefit from HELB and do not secure employment.
HELB has 300, 000 students who have been allocated loans to the tune of Ksh. 24 billion. Due to the high interest rate, only a small percentage of these students manage to pay back the loans on time.
The number of students advanced loans in every financial year as estimated by the PBO is 50,000 with each student being advanced an average of Ksh. 200, 000 by the time they are completing their studies.
Reports indicate that one of HELB’s pain points has been Ksh. 6.6 billion worth of non-performing loans given to 64, 000 former university students; an indication of their inability to repay the loans.