MP furious after colleagues shot down bill meant to reduce HELB’s interest rates

Wednesday, September 1st, 2021 08:08 |

Nominated Member of Parliament Gideon Keter has faulted the education committee in the National Assembly for rejecting his Higher Education Loans Board (Helb) Amendment Bill, 2020.

The MP said the sole purpose of the Bill was to cushion graduates and persons with disabilities against high interest rates and punitive penalties imposed by the Helb.

In a long thread on his Twitter handle, the legislator wrote: "As the youths representative in Parliament, I'm aware of the challenges youths and persons with disabilities face to get jobs, most of them often searching for jobs for years without success. The Bill was to provide deserving reprieve to those who fail to get jobs.

"Joblessness is still rife in the country. The Public Service Commission, for instance, employed only 1,800 graduates in the 2019/20 financial year against 500,000 graduates who acquired degrees that year.

"Reports also indicate that it takes at least more than five to four years for most of the graduates to get reliable jobs. Expecting a jobless graduate to start repaying a loan a year after graduating is unimaginable. Imposing punitive penalties of Ksh60, 000 annually for failing to do so is unacceptable

"Presently, the Board charges four per cent for loans advanced. They also demand repayment in 12 months after completion of studies whether one is employed or not. The Bill was to further reduce the interest rates and importantly provide for a five year grace period instead of the existing one year

"The Bill was to also scrap annual penalties of Ksh60,000.

"I took time to take them through the myriad challenges graduates encounter as they search for jobs. I beseeched them to adopt the Bill, urging them to be more empathetic of the difficulties many have to surmount in their quest to acquire a job after graduation.

"The Education Committee rejected the Bill on the premise that it risked the long-term existence of the Loans Board. The Committee also said the existing four per cent interest cap was adequate and should not go lower to safeguard the Board's existence.

"We will continue to push for these changes to the Helb Act because we strongly believe they don't have any serious impact on the Loans Board."

On his part, Nyeri Town MP Wambugu Ngunjiri who is the vice chair of the education committee that shot down the Bill, said the Bill was not going to succeed because of the effect it would have had on the sustainability of Helb and its ability to continue helping needy students now and in future.

He said: "The current undergraduate loans are charged interest at a rate of four per cent per annum. The proposal was to reduce it by one per cent to three per cent.

"Unfortunately even the 4% interest rate is lower than the annual average inflation in Kenya which was at an average of 4.69 % in 2018, 5,2 % in 2019 and 5.41 % in 2020.

"This means that the actual value of the amounts disbursed is eroded each year since the annual interest rate charged is lower than the inflation rate. Economically, the resultant real value of monies disbursed is therefore reducing with time. This puts Helb at the berg real danger of not being sustainable in the long run, to the detriment of future needy students."

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