Helb debtors to miss out on bank loans

The Higher Education Loans Board is set to be reformed in a bid to revolutionise university education funding in Kenya. Read (Helb targeted for reforms in bid to revamp varsity funding)

Helb, whose main province has been offering loans, bursaries and scholarships to public university students now wants to officially bring on board those from private and mid-level colleges.

But it is its engagement with the Credit Reference Bureau that has handed the board the biggest muscle to deal with its worst nightmare for decades — loan recovery.

The bureau capitalises on information sharing that involves circulation of names of defaulters to all lenders, potentially locking them out of the credit market.

The statute under which Helb is founded is to be repealed and changed to the Higher Education Financing Agency (Hefa) and will be charged with issuing vouchers to students seeking university places.

Once a student has been presented with a voucher, he will then approach a university of choice (public or private) and present it for consideration for admission.

These reforms are part of the recommendations by a taskforce that was aligning the university education with the Constitution.

It was appointed by Higher Education minister Margaret Kamar in September last year.

The Constitution

The Report of the Taskforce on Alignment of the Higher Education Science and Technology sector with the Constitution was released last month.

It seeks to ensure equality among those benefiting from public resources as enshrined in the Constitution.

The Bill of Rights, Article 27 provides for the right to equality and freedom from discrimination.

“Policies, strategies and laws to be developed shall be designed to promote equality and non-discriminatory practices in access to higher education and in distribution of public resources,” said the chairman of the taskforce Prof David Some.

The voucher will take the form of a cheque and its value will depend on the status of the deserving student.

“Moreover, there is a need to profile the students in terms of their county as well as different socio-economic groups for equity resources,” says the report.

But for Helb to effectively carry out this mandate, it will work closely with a new body to be formed — the Kenya Universities Central Admissions Agency (Kucas).

Kucas will coordinate selection of Form Four students to public and private universities based on their performance and choice of courses and will succeed the Joint Admissions Board.

Once the agency has selected a student to join the universities, the student would then apply and chose a private or public university that would accept the voucher awarded by Hefa.

The loans board is currently seeking more funds from the Treasury to enable it meet the new objectives where it would be required to fund students irrespective of the institution of higher learning where they have been admitted.

But it is also enacting measures to ensure that more than 76,000 beneficiaries who are due for repayments start refunding the Sh8 billion they owe Helb.

A part of this amount will be used to award bigger loans and bursaries by September to an estimated 80,000 beneficiaries in universities and the mid-level colleges.

The loans board has also embraced new technology to recover money from loanees, notably by the use of mobile money platforms and monthly reminders to defaulters.

And in order to encourage graduates without steady sources of income to repay, Helb has now opened its doors to negotiate with past beneficiaries the amount of money they are able to pay.

These are some of the strategies that the board headed by Benjamin Cheboi is adopting in raising revenues that will see current beneficiaries enjoy bigger loans, bursaries and scholarships.

“Helb’s capitation on student loans and bursary has remained at Sh1.4 billion and Sh82.3 million, respectively, despite increase in the cost of living and the number of students admitted into the universities,” a report on government spending on the education sector says.

Because of the stagnant capitation, the current unit cost per student of Sh120,000 per programme that was calculated in 1995 where the government pays Sh70,000 per student, leaving Helb to supplement the rest, is no longer adequate.

The lack of review of the revenues has seen universities rely heavily on parallel degree programmes where self-sponsored students pay higher fees and supplement university income.

This has driven public universities to increase enrolment of the parallel degree programmes from 100,649 students in 2008 to 143,114 last year.

The mid-year expenditure report has therefore recommended that Helb be allocated an additional Sh1.5 billion, as it seeks to reverse the trends where 50 per cent of the student population in universities is on parallel programmes.

“This will ensure that loans, bursaries and scholarships awarded to students reflect the current economic status try and put Helb in a position to meet the increasing demand for loans, bursaries and scholarships,” says the report.

Although it has not revealed details of the new allocation per student, it is expected that the amount will rise above the current minimum allocation of Sh35,000 and a maximum of Sh60,000 depending on the socio-economic status of the student.

The students who also benefit from bursaries ranging from Sh3,000 and Sh8,000 are also set to receive more.

Demand for loans has been fuelled by Helb’s expansion of its capacity to offer loans and bursaries to Kenyan students in private universities and mid-level colleges within East African Community.

The creation of 15 constituent colleges (projected to be 24 by the end of the year) exerted more pressure on the board.

Undergraduate loan beneficiaries increased from 42,563 in 2007 to 77,141 last year, according to the report.

There are nearly 200,000 students enrolled in universities with the figure projected to hit 600,000 in 10 years.

Some 7,579 students benefitted from the bursary awards and student enrolment scheme of the board last year.

Some 8,386 students were awarded bursaries amounting to Sh380 million last year where the total expenditure including operations for Helb rose from Sh3.4 billion to Sh3.6 billion in 2008 and 2009 respectively.