Despite past beneficiaries owing billions of shillings and limited funding from the Exchequer, the Higher Education Loans Board (Helb) is overwhelmed by the high demand for student loans.
As a result, the board has made loans that are insufficient to support students at universities and post-secondary training institutions.
The board estimated that 236,555 university students would apply for loans during the current fiscal year, which ends in June, consuming Sh10.2 billion.
They received 269,000 applications in total. Helb had predicted that approximately 162,147 continuing students would apply for education loans totalling Sh7 billion, but the number was exceeded by 14,853, while new applicants totalled 92,000, up from the estimated 74,408, forcing the board to reduce the amounts allocated to students.
Helb CEO Charles Ringera attributed the increase in applications to the negative economic effects of the pandemic, adding that some students had “overstayed” in their studies.
According to Mr Ringera, the board experimented with the amount of money given to students (which was reduced from Sh42,000 to Sh40,000) but was still unable to fund 75,000 applicants due to a Sh3.2 billion budget deficit.
The unfunded students were also not taken into account in the supplementary evaluation.
The number of applicants for students in technical and vocational education and training (Tvet) institutions exceeded the estimated number by 37,110 from the original 80,273.
Helb had requested Sh22 billion from the Exchequer but received only Sh11.3 billion. It was supposed to raise Sh4.3 billion from loan recoveries at the time.
“We’re on course to meeting the target. All indicators are that we’ll definitely surpass loan recoveries past the Sh4.3 billion. The challenge has been on the demand side,” Mr Ringera told the Nation.
The board is likely to be in the same situation in the coming fiscal year, as the budget proposals presented to Parliament two weeks ago did not account for additional funding, despite an increase in the number of students leaving secondary school.
As a result, more students are expected to enroll in university and Tvets this year, putting additional strain on Helb’s finances.
Helb lifted the penalties on loans for past beneficiaries who cleared their balances as part of a campaign to raise funds for the board in early March. The campaign will conclude on April 30th.
Mr Ringera stated that as of the end of March, 3,572 beneficiaries had paid Sh202 million, despite the fact that the goal is to recover one billion shillings. Kenyans in the diaspora are said to have taken advantage of the penalty waiver more effectively.
Even as the financial struggles go on, 107,211 past loanees owe the board over Sh10.6 billion in what the CEO described as “hardcore debts”, which are over three years since maturity but are not being serviced.
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Some of the loans stretch back to 1974 and the beneficiaries might be dead but the data has not been cleaned up. The high unemployment rate has also been blamed for the inability to pay by some beneficiaries.
At the moment, 644,361 accounts totalling Sh81 billion are due to be repaid. Of these, 254,135 have cleared their accounts totalling 26 billion shillings.
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