Some 120,000 beneficiaries of funds from the Higher Education Loans Board (Helb) have defaulted repayment of the Sh8.5 billion they owe the instutition, nearly crippling its services.
Helb chief executive Charles Ringera explained that the majority of the students defaulted due to the Covid-19 pandemic.
“We are struggling to bring the defaulters to repayment mode,” Mr Ringera said on Friday, at the end of a two-day stakeholders meeting in Mombasa, themed ‘Strengthening equitable access to quality higher education in the post-pandemic environment’.
“We have about 314,000 who repay their loans every month. Those are the ones who give us the liquidity to fund new students coming on board. As for the hardcore debt of Sh8.5 billion by 120,000 ex-loanees … unless they pay it will be impossible for us to educate in the future,” he warned.
However, the official assured the defaulters that the board had pulled them out of the Credit Reference Bureau (CRB) following the government’s directive.
He said that in the event of issues at the CRB, the board's debt management should be consulted for delisting.
“None of the defaulters are in the CRB but there is a challenge in terms of how people look at the CRB. It is not for defaulters. It is for people who have taken credit, who get credit scores. If you are repaying your loan very well, you will be on the CRB but your credit score will be positive. If you are not paying it will be on a negative credit score,” he explained.
He noted that individuals with positive credit scores can go to financial institutions and discuss funding with better interest rates, unlike those with negative scores.
Mr Ringera further said the board had released Sh14.8 billion to fund some 347, 000 students in colleges and universities as it sources for funds for some 140,000 continuing students in technical and vocational education training institutions (TVETs).
“This year, the government intended to spend Sh14.8 billion to fund 347,000 students. However, when it came to the loan application process, because of students overstaying in universities due to Covid-19, there were delays of even one and a half years, and we had more demand from continuing students,” he said.
He said the demand outstripped Helb’s budget by about 140,000 students, both in TVETs and universities. However, the chief executive officer said the board is sourcing Sh5.7 billion to fund the 140,000 students.
“For this year’s budget, we have so far released Sh14.2 billion so we are only left with Sh600 million to be able to fund the entire budget for this year. That is going to come from loan recoveries. The Treasury has already released the entire capitation that is Sh11.1 billion and it is already with us. We have paid the students part of the Sh14.2 billion we have released.”
Mr Ringera said the board has also received Sh3.5 billion, which has been set aside for student financing.
He said Helb will continue to recover its funds monthly, an amount between Sh350 million to Sh400 million.
“That is what we will use to cover the Sh600 million. As for the 140,000 students who represent an extra demand this financial year, we are discussing with the exchequer to see whether they can release the funding,” he said.
