Beneficiaries of the Higher Education Loans Board (HELB) will start servicing their loans five years after completing studies should the new bill currently in parliament is enacted in law.
The proposed changes in the HELB Act also seek to cut the interest rate slapped on beneficiaries from the current 4% to 3%. If passed into law, the adjustments will also go along way in offering relief to thousands of young graduates who have lost jobs owing to the economic downturned occasioned by the COVID-19 pandemic.
A recent report by the Kenya National Bureau of Statistics (KNBS) revealed that over 1.7 million Kenyans lost their jobs between April and June 2020 when accompanies went into self-preservation mode.
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“The aim of these proposals is to reduce the financial burden on recent graduates who are expected to pay large sums of money to HELB even before securing employment or becoming financially stable. It sets the percentage of interest that may be charged on the loan advanced at 3%. It also provides the penalty charged on defaulting of the loan should be charged after securing employment or five years after completion of studies,” the bill reads.
Currently, beneficiaries of the fund are expected to start repaying their loans one year after completing their studies regardless of whether or not they have secured employment. A monthly fine of KSh 5,000 is levied on defaulters.
This has landed thousands of graduates in the defaulters’ book since most of them spend several years before securing jobs that can allow them to start servicing their loans. Others don’t get jobs at all and risk being blacklisted by Credit Reference Bureaus (CRB).
