By George Gichuki
Higher education is widely viewed as a very viable investment. This is because after graduating, many students secure jobs, earn promotions or venture into business which improves their socio-economic status. Nevertheless, higher education does not come cheap. In the event that one is not able to raise the requisite fee to join an institution of higher learning (either individually or from family members), he or she is forced to look for other sources of money which is a laborious task.
In the worst case scenario, the dreams of many individuals eager to pursue higher education have been nipped in the bud even after they have managed to secure learning opportunities because of lacking funds. It is against this background that the Higher Education Loans Board (HELB) was established by an Act of Parliament (Cap 213A) in 1995 as a state corporation under the then ministry of higher education, science and technology. HELB is the leading financier of higher education in Kenya. Key among its responsibilities is sourcing funds, establishing, managing and awarding loans, bursaries as well as scholarships to Kenyans pursuing higher education in recognized institutions of learning.
Going down memory lane
The genesis of the Higher Education Loans Board dates back to 1952 when the colonial government awarded loans under the then Higher Education Loans Fund [HELF] to Kenyans pursuing university education in institutions outside East Africa notably Britain, USA, former USSR, India and South Africa. Students who were pursuing university education in universities outside East Africa and were not on scholarships were advanced loans by the said government against securities such as title deeds, insurance policies and written guarantees. By 1974, provision of education in general had expanded intensely as a result of the yearning for more learning by most Kenyan families.
Consequently, the number of students seeking university education grew to an extent that it was becoming increasingly difficult to adequately finance the same, by providing full scholarships and grants by the government. The government therefore introduced the University Students Loans Scheme (USLS), which was managed by the ministry of education. Under the scheme, Kenyan students pursuing higher education at Makerere, Nairobi and Dar es Salaam universities received loans to cover their tuition and personal needs, which they would repay on completion of their studies. However, USLS was plagued with a number of challenges right from the onset. To start with, it lacked the legal basis to recover matured loans from beneficiaries. In addition, the general public and university students wrongly perceived the loan as a grant from the government, which was not to be repaid.
In order to address this challenge, on 21st July 1995, the government through an Act of Parliament established the Higher Education Loans Board under the HELB ACT Cap 213 A to administer the students’ loans scheme. In addition, the board was empowered to recover all outstanding loans given to former university students by the Government of Kenya since 1952 through HELF and to establish a revolving fund from which could be drawn for lending to needy Kenyan students pursuing higher education. The establishment of a revolving fund was also expected to ease pressure on the Exchequer in financing education, which currently stands at 40% of the annual national budget.
To date, only a few amendments have been done to the Act. They include the introduction of data sharing with the Kenya Revenue Authority as well as the responsibility which the borrower should bear. In that respect, if the borrower fails to repay his or her loan back on time, there is a penalty of Kshs. 5,000 per month. It is also the responsibility of the employer to cross check with HELB whether a certain employee has benefited from its financing. Since its establishment, HELB has funded over 645, 000 students at a total cost of over Kshs. 72 billion. By the same token, 113, 000 students have cleared their loans amounting to Kshs. 13 billion. In addition, 136, 000 students are currently repaying about Kshs. 31 billion, while 264, 000 have been advanced approximately Kshs. 29 billion. Unfortunately, the period to repay Kshs. 8.5 billion by 85, 000 students has lapsed (they have neither serviced their loans for over ten years nor made any plans to do so). Such borrowers are referred to as hard core debts. In the same breath, HELB has 15, 000 records of students without a unique form of identification and who have been advanced about Kshs. 800 million.
In 2013, HELB made a major shift in its funding policy. It started funding tertiary education – particularly students in technical, vocational education and training (TVET) colleges which are under the ministry of education. “We started by giving a bursary of a small figure amounting to Kshs. 300 million and in the subsequent years, we have added more colleges mainly from the ministry of education bearing in mind that mind that the government’s programme of putting up a TVET college in every constituency is still ongoing,” expounds the chief executive officer (CEO) of HELB, Mr. Charles Ringera. So far, under the said programme, 130 colleges are complete and 70 of these are under the HELB funding programme.
Mr. Ringera continues to say: “I was in parliament the other day and I established that the number of colleges under the equipping stage is now 203; the vision of achieving the 290 target in the next 2 years is being realized.” The amount of funding directed to TVET was raised from the initial Kshs. 300, 000 million to Kshs. 600,000 million in 2015. Last year in particular, Kshs.900, 000 million was advanced to TVET students while this year, HELB is on course of disbursing Kshs. 1.2 billion. Other colleges which have come on board include the Kenya Medical Training Colleges and the faith-based medical training institutions.
The latter were brought on board after funding from USAID which was channeled to healthcare workers. The government matches a shilling with a shilling from USAID and that money is channeled to these students. “To date, we have supported the training of over 12, 000 healthcare workers after spending about Kshs. 900 million on that account,” says Mr. Ringera. “This year we will be financing about 4, 500 nurses and spending about Kshs. 350 million,” he adds. The healthcare kitty has been expanded quite a lot since HELB has partnered with other like-minded organizations like the Standard Chartered Bank ( through the bank’s Seeing Is Believing campaign), I&M Bank (which supports about 15 students), Family Bank Foundation ( which channels support under its healthcare pillar) and various county governments. On the undergraduate programme, HELB will be supporting 220, 000 students this year and spending approximately Kshs. 9 billion.
Its budgetary spending this year will amount to about Kshs. 11.2 billion. It shall be advanced to 264, 000 students pursuing courses in various fields. HELB also runs a scholarship programme as part of its corporate social responsibility (CSR) initiatives. The programme supports Science, Technology and Innovation (STI). Currently, it has been realigned to respond to the needs of the government’s Big Four agenda ( whereby the government will focus on rolling out projects under manufacturing, universal healthcare, affordable housing and food security pillars in the next five years in its bid to accelerate economic development). To that end, HELB will be issuing 99 scholarships worth Kshs. 28.3 million spread across all the counties. HELB also has a product for employed persons who wish to advance their studies. This year they’ll be funding 3, 500 persons at a total cost of over Kshs. 350 million. HELB currently supports students in 71 universities. It also supports students in 70 TVET colleges and the number is still growing.
Moreover, HELB also extends a hand to students in 85 medical training colleges and faith-based colleges producing healthcare workers. The organization is also supporting students in six universities in Uganda, one university in Rwanda and another one in Tanzania as part of the East African Community agreement of allowing citizen mobility to pursue their dreams. Upon receiving policy directive from the ministry of education, HELB will soon start supporting Kenyan students studying abroad. “We are gearing towards universal funding once we mobilize more financial resources,” says Mr. Ringera. “Hopefully, we shall actualize that dream once we transform into a development financial institution,” he adds.
HELB has partnered with a number of organizations in its endeavor to achieve its mandate. To start with, the ministry of public service has advanced HELB a kitty of Kshs. 130 million to support the civil servants pursuing higher education. Secondly, the Kenya Revenue Authority’s (KRA) training kitty is also managed by HELB on a revolving basis. There are other partnerships in the pipeline including the Kenya Accountants and Secretaries National Examination Board (KASNEB) fund which will be channeled through HELB to support professional training for accountants. Currently, HELB is managing revolving funds for Busia, Kakamega, Taita Taveta and Uasin Gishu which support students from the said counties to pursue higher education. It is also in the process of partnering with: Nyandarua, Bomet, Bungoma, Kericho, Embu and Nyamira counties. By the same token, the state corporation is also managing funds for constituencies like Tigania West, Tinderet, Awendo and Karachuonyo.
Loan Recovery Campaign-Twende Tulipe HELB
There are 85, 000 beneficiaries of loans from HELB who defaulted. “Persons who have defaulted from loans offered by HELB towards completion of their studies need to understand that the money they are withholding could be used to educate another academically gifted yet needy student in the country,” says Mr. Ringera. Consequently, HELB is currently running a campaign targeting beneficiaries of its loans so that they can start making payment plans. If that money were to be paid back, then HELB’s vision of universal funding would become a reality since the organization would be able to fund more students.
“Next year, we are looking at a budget of about Kshs. 15 billion to enable us fund about 30, 000 students, out of which the National Treasury will allocate us Kshs. 7.7 billion,” Mr. Ringera notes. “If we are able to recover the outstanding loans, then we shall comfortably meet that budget,” he emphasizes. The ongoing loan recovery campaign is dubbed ‘Twende tulipe HELB’ (Let’s honor our dues with HELB). The first TVET graduates who were funded from 2013 graduated last year and HELB is sensitizing them on the need to start repaying their loans during this campaign. The campaign is also targeting hospitals which absorbed graduates funded from 2013 so that the latter can be cleared by HELB. The aim of the campaign is to create a culture among Kenyans who are advanced loans by HELB on the need to service them on time. “We have launched this campaign because of the surging demand for HELB to fund more students and the high number of graduates who have not started servicing their loans,” Mr. Ringera emphasizes. HELB debt recovery programme has been adversely affected by the long electioneering period in the country last year.
Currently, the organization is recovering approximately 94% of its target but it is hoping to raise that to 100%. “We are optimistic that the positive developments in our political and economic environment will enable more individuals to honor their obligations with us,” Mr. Ringera further says. The platforms The campaign is being rolled out using both the print and electronic media. By and large, it is also using the social media – one of the biggest platforms that HELB uses to create awareness about its products and loan recovery mechanisms both locally and internationally. Above all, the campaign is being supported by HELB’s conscious decision to offer first class experience to its customers. In that respect, it has expanded its repayment channels by having a presence in 24 Huduma Centre branches across the country.
By so doing, HELB has taken its services nearer to the citizens. The repayment channels for those abroad have also been expanded through different online platforms. Loanees can now access their statements on the HELB website (www.helb.co.ke) where they can pay via e-commerce. Mobile money transfer platforms like M- Pesa Pay bill number 200800 (account number is your ID number) have also created more convenience in terms of payments to the loanees. “We make a lot of effort to recover the loans advanced so that we can continue funding more needy students,” Mr. Ringera emphasizes. The Exchequer through the Ministry of Education has continued to be a bed rock in funding HELB. In this year’s budget for instance, the Exchequer will be taking care of HELB’s 60% funding requirements, 38% will come from loan recoveries , while the remaining 2% will be from other sources like the corporates, county governments and benevolent individuals who offer monetary aid to the organization .
Despite making tremendous progress since its inception, HELB has continued to grapple with the high level of unemployment and under-employment challenge among graduates in our country. In several very unfortunate circumstances, some beneficiaries of its funding have passed on before completing their payments. To mitigate this risk, HELB has insured all the post graduate loans and come next year, it will insure all undergraduate and TVET loans.
The road ahead
In the next five years, the game plan for HELB is to mobilize more resources.It will also start its next wave of transformation by devising ways and means of mobilizing savings. “We are planning to start opening accounts for parents so that they can start saving for their children’s higher education,” Mr. Ringera points out. “When the time is ripe for the child to pursue higher education, we shall top up the parent’s savings with our own kitty, hence the total amount advanced shall be substantial,” he adds. HELB also wants to get nearer to its customers.
Consequently, its next wave of transformation will lay emphasis on a customer-centered model. The leading state corporation has also invested in a versatile information technology (IT) platform that will enable it to release and collect funds electronically. Ultimately, its goal is to achieve universal funding which will not be possible unless it accumulates more resources. Currently, HELB has a presence in 24 counties but is looking forward to penetrating the remaining 23 in the next five years in order to enhance its service delivery. By leveraging on technology and a model that gives all its customers a memorable experience, that should not be a tall order for Mr Ringera and his team.