Release Sh6b for students loans, Helb tells Treasury
Board wants lawmakers to assist in the push for disbursement of funds to enable learners to settle.
The Higher Education Loans Board (HELB) on Wednesday decried delayed disbursement of Sh6 billion for students, which should have hit their accounts in January.
Chief executive officer Charles Ringera said the Board does not have money to release to about 500,000 students, even as he urged the National Assembly’s Committee on Education to intervene so that the money can be disbursed to learners soon.
He said the board is expected to disburse at least Sh3.7 billion to university students and another Sh2.3 to Technical and Vo-cational Education and Training (Tvet) learners.
“We are still waiting for funding from the National Treasury, for now we do not have funds to release to students. The students will have to be patient because we have nothing to give them at the moment,” said Ringera.
The issue of delayed funds has further been exacerbated by loan defaulters, some of whom the board says have the capacity to pay but have disregarded the repayment plan.
University Education Principal Secretary Simon Nabukwesi reiterated Ringera’s sentiments, saying legislators should assist in pushing for disbursement of money so that learners can settle down.
“We need to enable our students to settle down because it has taken too long to release funds. Funding by the National Treasury has been low but we need a way forward,” said the PS.
The officials made the remarks a day after Moi University students said they have been starving for weeks, even as the administration assured that the matter is being addressed.
“It has come to our notice that there are several students who are starving and have been going without meals for some days. This is to request all students to send de-tails of anyone who is starving to the Dean of Students through class representatives and student leaders,” read an internal memo dated March 8.
Moi University students yesteday took to the streets demanding that HELB releases money.
Ringera also responded to questions from Education committee members, including the issue of amending Section 6 (c) of the HELB Act, which provides that the board sets criteria and conditions governing granting of loans including the rate of interest and recovery of loans.
The proposed amendment is to delete the words ‘rate of interest’ and if adopted it will require the board to set criteria and conditions governing granting of loans including recovery.
“In essence, the power to set interest rate will be taken away from HELB. It is not clear to whom the power will be vested on and how it will be exercised,” Ringera explained.
He stated that subjecting applicable interest rate approval to a third party creates a risk of reducing HELB’s revenue where the interest is varied downwards.
“Previously, there were attempts to reduce the undergraduate interest rate from the current 4 per cent to 2 per cent or no interest at all,” he added.
Since inception, Ringera said HELB had empowered about 1.1 million students and disbursed more than Sh116.1 billion.
As at last month, there were 563,283 mature accounts worth Sh69.3 billion while Sh46.8 billion held by 506,668 loanees had not matured for repayment.
He said loan recovery has been a major component of resource mobilisation for HELB as a revolving fund and has immensely contributed to annual students’ funding budget reaching a high of Sh4.5 billion in 2019/20, which funded 121,622 students at an average of Sh37,000 per student in the year.
He said that currently, undergraduate loans are charged at a rate of 4 per cent annually, and is lower than annual inflation in the country, which was at an average of 4.69 per cent in 2018, 5.2 per cent in 2019 and 5.41 per cent last year.
“Hence, the actual value of amounts disbursed has been eroded over time since the annual interest rate charged is lower than inflation rate. Economically speaking, the resultant real value of monies disbursed is reducing with time,” said Ringera.
At an interest rate of 4 per cent annually, Ringera told the MPs that the amount of interest on mature loans is Sh2.8 billion and if reduced to the proposed 3 per cent, the board will lose an opportunity to collect Sh693 million annually translating to a loss of Sh3.5 billion in five years.
He said a reduction in interest rate will plunge HELB into a huge student funding deficit where more than 18,730 needy stu-dents could miss out on funding annually.
“This will impact negatively on HELB’s ability to finance students as follows – at an average of Sh37,000 per student annually, the said 683 million is adequate to fund 18,730 needy students in a year and 93,650 students in five years,” explained Ringera.