New law spares jobless graduates Helb interest pain

Applicants visit Helb offices in Nairobi. MPs on August 19, 2015 passed a law sparing jobless graduates from paying interest on their loans. FILE PHOTO |

What you need to know:

  • During debate, Mr Kangata proposed changes to protect the fund from abuse by students.

  • Unemployed graduates, for instance, will have to sign affidavits indicating that they are jobless to avoid being slapped with interest on their loans.

MPs have passed a Bill shielding graduates from paying interest on government study loans if they fail to land jobs after graduation.

The Higher Education Loans (Amendment) Bill, sponsored by Kiharu MP Irungu Kangata, also grants students two slots on Helb board to protect their interests.

During debate on Wednesday, Mr Kangata proposed changes to protect the fund from abuse by students.

Unemployed graduates, for instance, will have to sign affidavits indicating that they are jobless to avoid being slapped with interest on their loans.

The affidavits have to be renewed every year.

PERJURY RISK

“The affidavits will ensure those who abuse the provision by stating they are jobless when they have a source of income are charged with perjury,” he said.

The Bill, which was hailed by lawmakers as pro-poor, also gives regular students in public universities priority in the disbursement of study loans over those pursuing parallel programmes and those in private universities.

The lawmakers were of the view that regular students are admitted on merit and mostly come from poor backgrounds.

However, those on parallel programmes and in private universities, which usually admit students on account of their financial ability, will also be entitled to Helb loans provided they prove that they cannot raise fees.

HARSH PENALTIES

The House rejected a proposal by Makadara MP Benson Mutura to include a representative of the Kenya Private Sector Alliance on the Helb board.

“We will be treading on dangerous grounds if we allow all manner of organisations, not recognised in law, to sit (on) the board of public institutions,” Rarieda MP Nicholas Gumbo said.

The Bill imposes penalties on loan defaulters, including being locked out of employment in the public sector.

MPs hailed the Bill, saying it would help bright but poor students get higher education.

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