Crippling HELB Appeals to 120,000 Defaulters to Repay Sh8.5bn
Some 120,000 Higher Education Loans Board (Helb) funds recipients have failed to repay the Sh8.5 billion they owe the institution, nearly crippling its operations.
Charles Ringera, the chief executive officer of Helb, explained that the majority of students defaulted because of the Covid-19 pandemic.
During a two-day stakeholders meeting in Mombasa with the theme ‘Strengthening equitable access to quality higher education in the post-pandemic environment’, Mr Ringera stated that they were facing difficulties in bringing defaulters to repayment mode.
He appealed to the defaulters to make payments and mentioned that they have around 314,000 individuals who repay their loans every month, which provides the liquidity to fund new students.
However, he warned that the hardcore debt of Sh8.5 billion by 120,000 ex-loanees would make it impossible for them to educate in the future if they did not pay.
The official, however, reassured the delinquents that the board had removed them from the Credit Reference Bureau (CRB) per government directive.
He stated that in the event of problems at the CRB, the board’s debt management should be consulted regarding delisting.
He explained that there was a challenge in terms of how people viewed the Credit Reference Bureau (CRB), as it was not solely for defaulters.
He stated that the CRB was designed for individuals who have taken credit and received credit scores.
He clarified that individuals who were repaying their loans well would be on the CRB with a positive credit score, whereas those who were not paying would have a negative credit score. He also mentioned that none of the defaulters were on the CRB.
He noted that individuals with positive credit scores can go to financial institutions and discuss funding with better interest rates, in contrast to those with negative scores.
Mr. Ringera added that the board had released Sh14.8 billion to fund approximately 347, 000 students in colleges and universities, while also sourcing funds for approximately 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.
According to him, the demand exceeded Helb’s budget by approximately 140,000 students, including both TVETs and universities. However, the chief executive officer stated that the board is sourcing Sh5.7 billion to fund the 140,000 students.
According to the HELB, they have released Sh14.2 billion for this year’s budget, leaving only Sh600 million to be funded for the rest of the year. The remaining amount will be sourced from loan recoveries.
The entire capitation of Sh11.1 billion has already been released by the Treasury and is now in their possession. Additionally, they have already paid a portion of the Sh14.2 billion that was released to the students.
Mr. Ringera stated that the board has also been allocated Sh3.5 billion for student funding.
He stated that Helb will continue to recover its funds each month, which will be between Sh350 million and 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.
Crippling HELB Appeals to 120,000 Defaulters to Repay Sh8.5bn
