How Helb’s Loan Terms Kill Graduates’ Dreams

Ideas & Debate

How Helb’s Loan Terms Kill Graduates’ Dreams


Students line up at the HELB offices in Nairobi. PHOTO FILE | NMG

The motto of the Higher Education Loans Board is “Empowering Dreams”. This succinct message captured the aspirations of those who oversaw its formation in 1995.

Most young people have valid dreams and are always hungry for academic opportunities to help them nurture those dreams.

Helb was created by an Act of Parliament to enable bright students from disadvantaged backgrounds to access cheap loans for tuition and maintenance.

His training was greatly appreciated as parents and guardians were relieved of the heavy burden of paying university fees.

Before Helb, college students benefited greatly from government freebies that they aptly called “Boom”. It was more or less a monetary reward for them to qualify to enter college.

Although it was quite popular, the initiative was not going to be viable in the long term as the number of university students increased. “Boom” has been replaced by student loans through Helb.

PUNITIVE AND IRREALIST

Although it has largely served its purpose of helping thousands of students pay their fees, the loan repayment model has grown too punitive and unrealistic over time.

To make the model more user-friendly and in response to the growing challenges lenders face after college, I sponsored the Helb (Amendment) Bill, 2020.

The main purpose of the proposed law was to protect graduates and people with disabilities from the high interest rates and punitive sanctions imposed by Helb.

As a youth representative in Parliament, I am aware of the challenges faced by young people and people with disabilities trying to find a job after university, most of them often looking for a job for years without success.

Unemployment remains a major problem in the country. The Civil Service Commission, for example, only employed 1,800 graduates in the 2019/20 fiscal year compared to 500,000 who graduated that year.

For most of those who fail to get into the civil service, some reports say it takes them at least five years to get reliable jobs. This is the painful reality on the ground.

Helb normally charges four per year for advanced loans. It also requires reimbursement 12 months after the end of studies, whether you are an employee or not.

If repayment is not started after the grace period has elapsed, they are assessed a penalty of 5,000 shillings each month. It is Sh60,000 per year.

For those who do not get a job for five years, they will have to pay Sh 300,000 as a penalty on top of their loans. Woe to those who will not have a job for ten years because they will have to face huge penalties.

Getting a job in the country has proven to be a daunting task for the thousands of graduates who leave university every year.

JOB OPPORTUNITIES

For the most part, they seek employment opportunities in the public service to gain experience. But with the government closing door after door, it is almost impossible for them to repay Helb loans.

Recently, the Treasury put a temporary freeze on new public service jobs, further reducing any hope that young people will get government jobs in the near future.

The bill therefore sought to provide respite for those who fail to find employment before the expiration of the grace period.

It was also about lowering interest rates, putting in a five-year grace period instead of the current year, and waiving penalties.

To expect an unemployed graduate to start paying off a loan one year after graduation is unreasonable. Imposing punitive sanctions of Sh 60,000 per year for not doing so is unacceptable.

Five years should be enough for a graduate to get a reliable job or start a start-up business before they can start paying off their loans.

Helb reported an increase in the number of defaulters, mostly students unable to secure a source of income for years.

In 2017, Helb had 85,000 defaulters who owed 9.6 billion shillings. This number must have increased by now.

It is understandable that the student loans commission must collect its loans to ensure its sustainability and be better able to meet the demands of needy students each year. But it must also be realistic. The default is largely attributed to the inability to get a job upon graduation.

The repayment of loans granted by a public institution should not be an additional burden for the unemployed. Imposing sanctions on unemployed graduates amounts to a double penalty. This is equivalent to punishing them if they have not found a job.

Helb was trained to help young people achieve their dreams. It should not be a stumbling block for those who are already on the right track to reach them.

Keter is a deputy representing young people in the National Assembly

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