Ease study loan woes but nurture payment culture

The university student loan scheme has enabled many beneficiaries from poor families to pay for their higher education. It’s one of the best innovations by the state to boost the training of the high-level personnel the country needs. But the programme has not been without hitches, including a high default rate.

Higher Education Loans Board (Helb) data show the total unpaid loans stand at Sh10.9 billion. The rising defaults have undermined the agency’s ability to support more needy students. Helb is highly dependent on the National Treasury, which, thanks to the depressed economy, cannot meet this and other public financial commitments. It’s for this reason that Helb has no option but to get the borrowers to pay up.

But that is easier said than done as many of the beneficiaries are jobless. Last month, the High Court ruled that some of the interest and penalties imposed by Helb contravene the Constitution. That was okay; but most importantly, the graduates must pay up so that others can also benefit from the loan.

Despite the ruling, however, the borrowers are reeling under hefty fines. A graduate who borrowed Sh270,000 says his balance had risen to Sh1.3 million by the time he started repaying. He still has Sh1.1 million outstanding. He is happy that the High Court has barred Helb from demanding from borrowers more than double the amount it lent.

However, defaulters have hampered Helb’s ability to support university and technical college students. With payments not coming in, and delays by the Treasury to release funds, the agency must reduce allocations. The main reason for the high default rate is the economic downturn. The two years of the Covid-19 pandemic have had devastating effects on businesses and jobs, hampering borrowers’ ability to repay their loans.

The revolving fund should not be impeded in dispensing loans and collecting payments, including interest. But the country ought to boost the economy and also nurture a culture of borrowing and timeously repaying debts so that creditors don’t have to resort to punitive strong-arm tactics.


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