A bill that proposed to slash interest charged on student loans to three percent and increasing the grace period for repayment to five years has been rejected by the National Assembly’s Education Committee on different grounds.
In its report, the National Assembly’s Education committee rejected the Higher Education Loans Board (HELB) Bill, 2020, warning that if adopted, the state agency stands to lose Ksh.693 million annually and Ksh.3.4 billion in a period of five years.
This is a real blow to students who sought HELB loans even as the Committee also shot down the proposal that wanted students to be given a longer repayment grace period.
Proponents of the Bill which was tabled in Parliament in October last year sought to make changes to the HELB Act and slash interest charged on the loans to three from the current four percent.
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With the tough economic groth, coinciding with the coronavirus deep cuts in the employment sector, students have now been left at the mercy of the bleeding economy.
Currently, graduates are required to start repaying the student loans within a year after graduation failure to which they attract a Ksh.5,000 monthly fine for defaulting.
The main goal of the Bill was to reduce the financial burden on recent unemployed graduates who are expected to pay large sums of money to HELB even before securing employment or becoming financially stable.
At the moment, students are required to start repaying the loans within a year after graduation failure to which they are rendered as defaulters.
This rule has left thousands of HELB beneficiaries at the risk of being blacklisted with the Credit Reference Bureaus (CRB).
