Reason Why HELB has Denied Life Saving Plan for Graduates
Reason Why HELB has Denied Life Saving Plan for Graduates. The Higher Education Loans Board (HELB) has rejected the 2023 Amendment Bill sponsored by Machakos MP Joyce Kamene, which seeks to ease the financial burden on new graduates.
In the current system, repayment of undergraduate loans begins one year after graduation.
Kamen’s proposal suggests extending the payment period to five years after young people and the disabled enter the workforce.
However, HELB CEO Charles Ringera expressed concern that changes to the law could lead to loan defaults, which could hinder the board’s ability to support other students who need financial assistance.
Ringera said HELB relies on loan repayments to maintain its revolving fund for deserving students, and extending the grace period to five years could reduce the number of students who can benefit from the funds.
In addition, Kamene proposed to reduce the interest rate on loans to young people and the disabled from the current four percent to three percent.
The Council disagreed with the proposal, citing potential negative effects on financial stability. They argued that lowering the withdrawal amount to three percent would negatively affect the revolving fund and hinder HELB’s ability to support students in financial need.
Ringera explained that the existing four percent interest rate is in line with the annual inflation rate. Lowering interest rates and extending repayment terms could disrupt HELB’s cash flow, with student loan amortization (AIA) accounting for a large portion of the student loan budget.
He said the August 19, 2023 decision by the High Court of Kenya, Justice Alfred Mabeya, limited HELB’s ability to pay fines and interest on the principal amount in default.
Kamen’s proposal suggests extending the payment period to five years after young people and the disabled enter the workforce.
Reason Why HELB has Denied Life Saving Plan for Graduates