Kenya’s Higher Education Loans Board, or HELB – the official government agency in charge of dispersing student loans- has launched a scheme to recover more than US$120 million in student loan repayments and attract millions of dollars to back long-term funding for the sector.
The drive forms part of HELB’s initiative to reduce Kenyan higher education’s dependency on government-borrowed money. Lottery-funded scholarships and nationwide savings schemes all form part of the brand new strategy.
The current fiscal year saw HELB request US$200 million worth of tax from the state, but the agency only received 14 percent of the original request (US$28 million) despite loan access being extended to include college and private sector students, not just those enrolled at Kenya’s public universities.
#Kenya: HE loans agency launches children’s education savings scheme for parents in new fundraising drive. https://t.co/MapqaSQuPN #highered
— UniversityWorldNews (@uniworldnews) March 31, 2016
Parents will be encouraged to invest millions into an education funding scheme as part of the new strategy, the aim of which is to significantly boost and sustain HELB’s total loan revenue. The scheme will allow parents to deposit up to US$10 a month in a savings account which they can put towards their child’s future education expenses, with money remaining redeemable for at least a decade.
The strategy means HELB will face direct competition from Kenyan insurance companies and fund managers who are already implementing child education funding plans. If HELB is to stand up to industry competitors, it will need to provide greater returns to attract the most valuable customers.
HELB also hopes to create national lotteries that will enable students to compete for prizes and access additional capital to invest in their education, according to HELB’s chief executive, Charles Ringera.
Gvt has increased funding to HELB. Very key to access to higher education #StateOfTheNation2016
— Macharia Wa Mwihaki (@jamesmacharia2) March 31, 2016
“We are relooking at our existing fundraising and loan recovery strategies to ensure we guarantee the long-term sustainability of the fund,” he said.
HELB’s current strategy seeks the bolster the agency’s student loan book from US$63.5 million to US$224.7 million over the next two years.
Kenya’s education ministry predicts that the number of first-time applicants in the region will grow five-fold from this year’s 32,776 to 147,687 by 2018, citing factors such as rising student numbers and increased loan accessibility as reason for the projected inflation.
For returning students, the number of applicants is expected to rise more than 50 percent, from 101,000 to 247,328 within the same time frame.
Deadline for HELB Application for the second subsequent undergraduates academic yr 2016/2017 is today so if… https://t.co/T8eBCLS7g3
— kenyatta comrade (@Comrade_Ke) March 31, 2016
The new strategy will provide between US$407 and US$698 a year for Kenya’s undergraduate student population. Successful applicants can also receive up to US$93 in bursaries which they will not have to pay back. Under the scheme, a student in Kenya may have accumulated debts worth US$3,000 by the end of a four-year course.
“Even as HELB mulls over the available options, it is important to remind the agency that a relentless pursuit of past beneficiaries, who are able but are not paying their loans, remains its best shot at staying solid in the long term,” wrote Kenya’s Business Daily on Monday.
“It might also help to increase penalties where it becomes clear that a loanee has been deliberately avoiding his or her obligations to the revolving fund. Most important, the state must stop playing politics with the fund and bring to an end the ever-growing list of beneficiaries.”
Image via Flickr.
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