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{
    "id": 916793,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/916793/?format=api",
    "text_counter": 353,
    "type": "other",
    "speaker_name": "",
    "speaker_title": "",
    "speaker": null,
    "content": "Recently, the HELB Board announced that the Government has lost over Kshs7.2 billion because about 74,692 graduates have defaulted the study loan. What are the reasons for defaulting? Loan repayment rate of former loanees and beneficiaries is low due to two main reasons. The first one is because of the accumulated interest on the loans. As I said earlier, interest starts accruing one year after completion of studies. In some cases people get employment after three years, yet they are supposed to start repaying the loans. At times, employers may find it hard to remit the money, but sometimes people get out of employment for various reasons. The main challenge in repayment of loans is the high interest accumulates over the years. As I said earlier, there is a penalty of Kshs5,000. If somebody is without employment for five years, you can do the mathematics of Kshs5,000 times 12 months for five years. How can such a person clear the loan when they still have to clear the principal sum of Kshs240,000 that they got? Unemployment is the second reason HELB loan repayment rate is low among graduates. While a few people get formal jobs, others enter into the informal sector. As I have stated, once you are blacklisted by the CRB, you cannot apply for a job anywhere in Kenya. You can also not get loans from other institutions, even when you have title deeds or anything from your family as security because of being blacklisted. That has created a dilemma to graduates because they cannot survive or do anything because of lack of jobs. This is some sort of exploitation of the worst kind. The management of the HELB needs to talk to its stakeholders, including former students, to find a way forward because what they are doing is not right. The Senate Committee on Education needs to review the repayment terms because the fines are making things even worse for the youth who are struggling to put food on the table. Some of the heavy penalty provisions are charged as a result of lack of communication with the HELB. For instance, when a student takes a break, such as an academic leave, without informing the HELB, the HELB expects them to have graduated at the date stated in their loan application form. Therefore they start charging penalties for every month they do not receive the money owed to them when the student has not completed their studies. This can be avoided by visiting the HELB offices with deferment of studies letters or academic leaves, which are issued by institutions of learning, and state new graduation dates. On the way forward, I propose that the Ministry and the HELB be compelled to institute a six-month full waiver period for interests and penalties, as well as the lifting of blacklisting by the CRB. However, the six months period should be extended only to defaulters willing to repay their loans in full within the same period. The Ministry and the HELB should embark on a 45-day sensitisation exercise preceding the waiver, not later than 90 days after the passage of the Motion. The sensitisation exercise should not only create a period for both the HELB and the defaulters to prepare for debt settlement, but also allow the loanees to organise their resources, so that they fully settle their outstanding loans. This is not applicable to those who have not gotten employment or had jobs for one year and lost them. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor, Senate."
}