HELB: We will not turn student loans into grants

 

HELB Board Chairman Charles Ringera speaking during the official presentation of the AFYA Elimu Fund report from Human Resources for Health Kenya Mechanism to HELB. [Wilberforce Okwiri, Standard]

The Higher Education Loans Board (Helb) is worried that converting the fund into a grant will kill its mission and force millions of students to miss university education. Helb’s chief executive officer, Charles Ringera said the government is already running a Sh43 billion grant through the Universities Fund (UF).

“This is money (grant) is paid to students in universities through the Differentiated Unit Cost (DUC) and they do not pay it back,” said Ringera.

Ringera also said Helb runs a Sh237 million bursary which takes care of desperate cases.

“We allocate Sh8,000 per student as bursaries and this translates to some Sh137 million for university students and Sh100 million for TVETs every year,” said Ringera.

Ringera (pictured) argues that the Helb loan component should remain to finance more students.

Addressing Meru University of Science and Technology students last week, ODM leader Raila Odinga said under his administration, students would not pay back the university loans. “I said that when we take over government, we will convert Helb into a grant,” said Raila.

Explaining his plan, Raila said every child born in the country irrespective of socio-economic status of their parents will get equal opportunities from the nursery, primary to university education.

“That’s why I am saying today when I get to power, Helb will be a grant not a loan,” Raila told the students.

Data from Helb shows that on average, each student is expected to pay about Sh300,000 upon graduation, depending on course duration.

Each student gets about Sh68,000 annually from Helb, which translates to about Sh5 billion, which it is expected to recover every year to support other students.

Ringera cautioned that converting the loan into a grant would dismantle the revolving fund strategy, which has enabled many students to complete higher education.

He also said that questions of equity may emerge as those who have already paid their loans would be disenfranchised.

“We also have counties and constituencies which have set up revolving funds to support students in their jurisdictions and the question is whether these will also be made grants,” said Ringera.

He said Kakamega County has a revolving fund of Sh128.5 million to support its students while Busia County has Sh55 million kitty.

“Countries like Malaysia no longer rely on exchequer to fund students because their revolving fund is solid and self sufficient,” said Ringera.

Ringera said that what needs to be done is streamlining students funding, arguing that some of them benefit from other sources of funding which are not declared.

“There is need to consolidate these funding (loans, bursaries, scholarships, corporate support, among others) from various organs and funnel them into one centralised funding for fair/equitable distribution and avoid undeserving duplication of beneficiaries at the expense of other deserving cases,” said Ringera.

Personal expenses

Presently, all government-sponsored students are funded at a flat rate of Sh120,000 per year based on a formula developed in 1989. Of this, Sh86,000 is tuition fees while Sh34,000 caters for students’ personal expenses, including accommodation, food and books, paid by the Helb.

Parents pay only Sh16,000 in fees.

Loan beneficiaries are expected to start repayment within one year after completion of their studies.

This also means that the loan interests start to accrue thereafter.

For undergraduate and TVET students, loans repayment interest is at four per cent with postgraduate beneficiaries’ rate pegged at 10 per cent.

University students are, however, upbeat that the move will lift up a huge load off their back.

“Instead of giving us loans reprieve, reducing interest and grace period, we suggested that this money be made a grant so that students may never worry about repayment,” said Kenya Universities Students Union (Kuso) president Antony Manyara, noting that loans repayment has slowed down due to Covid-19 pandemic that ravaged the economy.

Ringera said loans recovery, that contributes to 30 per cent of the projected funding, is crucial in supporting higher education sector.

Recovery trends for the last five years shows that in 2017/2018, Helb collected Sh4.9 billion from beneficiaries. These recoveries were used to supplement government capitation of Sh7.6 billion. That year alone, some 650,000 students were given loans of about Sh13.2 billion.

In 2018/2019, some Sh4.4 billion was recovered from beneficiaries.

And in addition to government capitation of Sh7.4 billion, some 680,000 students were able to get loans to the tune of Sh12.1 billion.

In 2019/2020, Helb recovered Sh4.4 billion. This year, government capitation was Sh8.6 billion but some 700,000 were able to get loans to the tune of Sh12.8 billion.

“Without the recoveries, we may never get enough money to support the students’ numbers that are increasing every year,” said Ringera.

In 2020/2021, Sh4.4 billion was recovered from beneficiaries and with government capitation of Sh9.1 billion, some 700,000 students got loans of about Sh13.4 billion.

This year, 2021/2022, Helb is expected to recover Sh4.5 billion.

Government has allocated capitation of about Sh11.3 and the fund projects to disburse Sh13.6 billion to 700,000 students.

Ringera said that the implication of converting the Helb into a grant means that the government must top up additional Sh5 billion annually.

This translates to an an extra Sh20 billion for a four-year course period.

The additional money for the students may even get higher if the government implements Helb survey findings which reveals that the students are underfunded. Helb survey shows that under the present economic situation, a student requires approximately Sh200,000 annually to sustain university education.

The report finds that the Sh68,000 allocated per student per year is not adequate, leaving a deficit of Sh132,000 to assist the learners.

In its finding, Helb report says that a university student needs Sh69,000 annually to cater for meals alone.

Accommodation needs are rated at Sh14,000, transport Sh11,500, clothing Sh12,500 and grooming Sh11,500.

Students’ entertainment is estimated to be Sh12,500, books and stationary Sh10,750, ICT Sh10,500 and tuition Sh16,000.

However, plans are also underway to raise the students’ fees to Sh48,000, up from the Sh16,000.