47,000 Students to Miss Out On HELB Loans In New Bill

About 47,000 university students could be left out of Higher Education Loans Board funding if a proposed bill is passed.

The new bill proposed by nominated Member of Parliament Gideon Keter suggests that the Higher Education Loans Board should lower its interest charged on loans from four percent to two percent.

“The maximum interest rate to be charged by the board on the principal amount advanced to a loanee shall not be more two percent per year,” the bill reads.

“The amendment seeks to remove from the board the functions of setting the rate of interest for loans granted under the Act.”

Gideon Keter argues that the high-interest rate charged on the loans is the reason most students are defaulting their loan repayments.

However, Keter’s proposal is strongly dismissed by the HELB CEO Charles Ringera who says that the loan interest generates revenue to the HELB thus helping a good number of needy students.

The loans’ board collects 3.74 billion shillings as revenue annually which is generated from the interests charged on loan defaulters. The generated revenue is used to support needy students in various tertiary institutions.

If the interest rate is reduced by half, the National Treasury will be forced to chip in and contribute 1.87 billion shillings, half of the revenue generated by the interest rates.

“Any additional gap means that Treasury will have to plug in to cover for the additional funds that will be created by reduced interest rates,” Ringera said.

The HELB CEO argues that the interest rate cut would affect the revenue base thus making students the biggest losers in the end.

“As students are increasingly taking more loans, the gap will continue to widen.”

Currently, the amount owed to the commission is 93.6 billion shillings. The interest rate applies only to the loan defaulters thus those who are making their payments are exempted from the penalties.