Parliament has revived an attempt to lower the interest charged on Higher Education Loans Board (Helb) loans to three percent from the current four percent, nearly a year after State House rejected a similar Bill due to a clause that sought to exempt beneficiaries from repaying their dues until they secure jobs.
The Helb (Amendment) Bill, 2023 marks renewed efforts by lawmakers to push for the lower interest charge, which they argue will cushion jobless graduates who have grappled with high loan servicing obligations and punitive penalties for defaults.
When rejecting last year’s Bill, Retired President Uhuru Kenyatta told Parliament that the changes would hit the Helb funding pool and lead to a reduction in the number of beneficiaries.
MPs are, however, seeking to push through the new Bill on similar terms as the old one, including the clause on shielding beneficiaries from repayments until they secure employment.
“It sets the percentage of interest that may be charged on the loan advanced at three per cent,” Machakos County Women’s Representative Joyce Kamene, the sponsor of the Bill, said in the memorandum accompanying the proposal.
Helb chief executive Charles Ringera had unsuccessfully petitioned the previous Parliament to drop the earlier Bill, saying the board would lose about Sh693 million every year if the interest was reduced by one percentage point.
This would translate to Sh3.4 billion in five years, hurting the agency’s cash flow amid low repayment from beneficiaries and low budgetary allocations against a jump in student applications.
Loan defaulters owed Helb Sh8.45 billion by end of February, up from Sh6.7 billion in June 2020, weakening its ability to support students, a majority of whom are from poor households.
