New Bill to Delay Repayment of Varsity Loans by 5 Years
Written by Davine Otieno on October 8, 2020
The new proposals presented in parliament seek to raise the grace period of repaying HELB loans from one to five years or after a beneficiary gets a job.If enacted in law, the proposal will also see interests charged on HELB loans reduced from the current 4% to 3%.
“The aim of these proposals is to reduce the financial burden on recent graduates who are expected to pay large sums of money to HELB even before securing employment or becoming financially stable,” the bill states.
Currently,the board expects beneficiaries of the fund to start servicing their loans one year after completing their studies regardless of whether or not they have secured employment.
Nonetheless , some defaulters who have not serviced their loans date back to as early as 1975, stated a notice HELB sent out to the public.
This has concurrently landed thousands of graduates in the defaulters’ book since most of them do not land jobs immediately after completing studies.
At the moment, HELB charges a monthly fine of KSh 5,000 monthly on defaulters.
Beneficiaries who fail to secure jobs risk being blacklisted by Credit Reference Bureaus (CRB).
A report issued by HELB in May last year indicated that over 444,000 loan defaulters expected to pay Ksh. 52 billion were on the run.
In the recent past,the board threatened to publish names and photographs of beneficiaries with unpaid loans in national newspapers in an attempt to prompt them to start repaying their loans.