MPs pay off college HELB loan, killing college careers

Author: Mike Kihaki | March 23, 2023

A large number of defaults by elected leaders contribute to the Higher Education Loans Board (HELB) hampering its operations and killing the careers of many students.

HELB CEO Charles Ringera told MPs that the Fund is struggling to collect money from honorable members of parliament, making it difficult for other underprivileged students to further their studies.

Ringera revealed that about 140,000 students of Universities and LHTs may lose 5,700 million in financial aid.

”We are out of cash at the moment and any time the money comes in the next day, it is auctioned off to nine authorized banks for payment,” Ringera said.

Ringera was speaking at the Public Investment Committee on Education and Governance the other day.

”I can complain to this parliament once they have not managed to pay. Deputies are men and women in the middle and perhaps what we need to encourage is that they come to pay the loans,” said Ringera.

Soti MP Francis Sigei has mocked MPs who default on loans, saying they are setting a bad precedent in public.

”The MPs who default on loans from the Higher Education Loans Commission are painting us in a bad light. We should be a good example,” said Sigei.

Sigei reiterated that defaulting on loan payments denies other needy students access to loans, forcing leaders to pay so the commission can continue.

”When you pay the money, you allow the board to give loans to other deserving students so that they can further their education. President, you must write to the National Assembly and the Senate about this matter, so that they can help you recover the money,” said Sigei.

However, Ringera said that in the past, there has been a high level of compliance across the market with some employers sticking to the introduction of loans.

He warned that employers are equally responsible for all borrowers.

Ringera revealed that the waiver granted through the credit policy has gone a long way in recovering students’ money, citing the 100 percent waiver during the Covid-19 pandemic.

“Except for Covid-19, we raised an additional Sh800 million, last year alone, reaching a record Sh5.2 billion,” he stated.

Ringera stated that if the Parliamentary Service Commission fails to recover the loans, a penalty of Sh3,000 per month on the loan and also the employer will continue to overcharge.

Ringera further said that if the borrower does not activate his account, the system charges Sh5,000.

The chairman of the committee, Jack Wamboka, who is also the Bumula MP, vowed to ensure that all bills pending in government institutions are paid.

”It is a trend in most of our government institutions across the country and we must stop it. We will make sure to make them pay,” said Wamboka.

Ringera also blamed the government for the Sh4.5 billion shortfall last year due to poor funding, saying the councils were left without money from the supplementary budget submitted to the National Treasury.

He said this year’s budget of Sh14.8 billion means the board should have at least Sh7.4 billion for students when schools open mid-year.

He said the government has always released Sh3 billion in August, a month before institutions of higher learning open for the first semester.

”The quarterly treasury payment is Sh3 billion our collection is Sh1.2 billion. This is below the Sh7.8 billion required to meet our loan demand,” Ringera said.

To solve this, the agency has signed an agreement with the government to release funds twice a year, four times to adequately meet the demands of students.

”We are working on a program with the Treasury to see how the cash flow will come out. We emphasized that if it can be linked to the academic calendar of the universities and institutes, it will be a good help for us,” he said.

Ringera noted that in September last year, the state released Sh5.6 billion, and with the collection of Sh4 billion from loans, the agency was able to settle all dues.

“What came from the government in the second semester of Rs 2,500 crore was not enough to meet the high demand of the students. Today, new graduates have to start paying off their loans a year after leaving the institutions”, said Ringera.