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Financing education: HELB comes to the aid of students

Student loans once meant long queues, painful waits, much uncertainty, but a potentially free ride to non-repayment. Not any more. The Higher Education Loans Board (HELB) has been reborn as a branch of e-government providing loans to any student winning a place at university or college to cover tuition and living costs.

The results have been a sweet relief for many a student. Typically is Paul Mwangi, a first year arts student, who has just come back from a two month recess. He can now concentrate on his studies with his finances taken care of. He applied for a HELB loan immediately he got his acceptance letter from the University of Nairobi.

In fact, the letter came with the application forms from HELB. He applied for the loan in June last year, two months before he was admitted at the University, and the funds were disbursed two weeks before he joined campus.

Mwangi is among the 70,000 current undergraduate students who have taken an education loan from the Board.

HELB disburses loans to government sponsored student ranging between Sh35,000 and Sh60,000 per year.

HELB has two types of loans to students pursuing their first degrees in local public and private universities. Direct entry students coming straight from high school and whose fees are subsidized by the government, or self sponsored students. Most of these students are fulltime students while loans for continuing students are tailored for working students. Direct entry student loans attract an interest of four per cent a year while continuing students are charged 12 per cent interest.

Post graduate students can also get loans, up to Sh120,000 a year, and PhD students up to Sh150,000 a year, based on their academic performance.

The amount of any one of the loans is decided on the basis of household income, with the most needy getting the highest amount of money. This is why Mwangi had to take the loan application form to his area Chief and religious leader for them to fill in the socio, economic and character details.

“All direct entry students get the loan as long as they apply for it,” said Mr. Cheboi, the Chief Executive Officer of HELB.

Expenses

Osore Jonah, a fourth year economics student, says the loan covers the cost of tuition and upkeep for most students.

“HELB deposits the tuition fees directly into the universities account a few days before we resume, the rest is deposited in our accounts for upkeep,” says Osore.

Osore says he spends Sh16,000 per year on tuition and Sh5,500 on the subsidized hostel room he pays at the beginning of each academic year. The rest he uses for his upkeep. The funds are released in two batches, just a few days before students come back from breaks.

“The first year might be a bit hard because of settling down and the annual fees paid to the university, but after the second year, it becomes easier. The amount we get from HELB is adequate to cover most of our expenses as students.” Osore says.

Mwangi paid Sh30,000 for tuition when he joined campus, but this amount reduces as he continues with his studies. The tuition fees charged is uniform irrespective of the course taken but may slightly higher or lower depending on the campus.

Managing the applications, getting the funds to current students and collecting the repayments from former students dispersed in different locations in and out of the country is no mean task, and has seen the board invest heavily in information technology.

Mr. Benjamin Cheboi , the Chief Executive Officer of HELB, believes information technology and communication has been the one thing that has transformed the board into an efficient, robust and transparent organization.

“By being able to effectively manage our database, we have improved efficiency and improved transparency within HELB,”he said.

This has seen the notoriously long queues that were synonymous at the HELB offices at Anniversary towers become a thing of the past.

Making IT work

Now, students apply for loans by downloading the forms from the board’s website and submit the forms online too. Borrowers can now track the application process online and, for those paying the loan, check their balance by either sending a text or checking on the board’s website.

“Our aim was to have a virtual HELB. A student can now apply for a loan, receive the funds and repay the loan without knowing where our offices are… and we have been able to achieve that,” said Mr. Cheboi.

For those repaying the loans, the widely used mobile payment systems of MPESA and ZAP have also made the payments easier.

During the 2007/2008 financial year, HELB recovered Sh1.34 billion from past borrowers. The board receives most of its funding from the government and during the same period, it received Sh1.367 billion for loan disbursement and Sh82 million for bursaries.

“We have seen a marked improvement in the repayment of loans, especially in the last two years. This is partly due to the public education we have done on the importance of paying the loan and partly due to a higher compliance rate by employers,” explains Mr. Cheboi.

According to the act governing the Board, employers are obliged to inform the board when one of their staff members owes money to HELB. Employees, on the other hand are required to inform and start repaying once they start earning a salary. The Board cannot take more than a quarter of a loanees salary.

Pay up

“We can easily track the debtors who are unwilling to pay. We are in constant communication with KRA (Kenya Revenue Authority), NSSF, NHIF and utility firms … it’s quite difficult for someone to totally disappear, but we prefer if people pay voluntarily. We don’t want to follow people up,” said the Chief Executive Officer.

Furthermore, HELB is now working with credit reference bureaus to blacklist defaulters.

Currently, 100,000 borrowers are repaying their loans.

“We have become the role model in higher education financing in Africa. Countries such as Tanzania, Rwanda, Ghana have taken our model of financing,” said Mr. Cheboi.

As set up, in 1995, HELB was established for the purpose of disbursing loans, bursaries and scholarships to Kenyan students pursuing higher education in recognized institutions. But Mr. Cheboi sees the board performing a bigger role; that of “an agent of transforming Kenya into a more equal and social society by having more graduates in the country, even as we push for the vision 2030 goals.”