Helb woes intensifies as defaults hit Sh11bn

Helb chief executive Charles Ringera. PHOTO | DIANA NGILA | NMG

By LYNET IGADWAH
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Summary

• The latest data from Helb shows loan accounts in default increased to 109,661 from the 106,443 recorded in December 2020.
• This highlights the struggle faced by beneficiaries who were making repayments on the strength of their payslips and cash flow from their businesses for those in self-employment.
• In a move to encourage loanees to honour their obligation, the agency has announced a two-month penalty waiver to loanees.

An additional 3,218 university graduates have defaulted on their Higher Education Loans Board (Helb) pushing up its bad loans to Sh10.9 billion for the year to December 2021 when the Covid-19 pandemic triggered layoffs, business closure and freeze in hiring.

The latest data from Helb shows loan accounts in default increased to 109,661 from the 106,443 recorded in December 2020.

This highlights the struggle faced by beneficiaries who were making repayments on the strength of their payslips and cash flow from their businesses for those in self-employment.

“A total of 109,661 loanees holding Sh10.9 billion are in default as of December 31 2021,” said Helb chief executive Charles Ringera.

In a move to encourage loanees to honour their obligation, the agency has announced a two-month penalty waiver to loanees.

The 100 percent penalty waiver dubbed KamilishaMalipoYaHelb which closes on April 30 also seeks to encourage those that have not started repaying to do so in lumpsum.

A similar campaign ran by the agency in 2013 saw some 10,110 beneficiaries pay off their loans valued at Sh1.3 billion. In 2018, the penalty waiver campaign saw 9,998 beneficiaries pay Sh870 million to the agency.

Beneficiaries are expected to start repaying one year after completing studies and risk blacklisting with credit reference bureaus over defaulting.

Helb is supposed to be a revolving fund in which beneficiaries who have completed studies pay back the loans to support a fresh group of students.

This has, however, not been the case in an economic setting that is plagued by a hiring freeze on the back of sluggish corporate earnings.

Loan defaulters have weakened the agency’s ability to support university freshers and continuing students, prompting allocation cuts.

The board has been relying on the Treasury and recoveries from past beneficiaries for funds, but the rising number of university students has made it difficult to meet growing demand or raise allocation.

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