University Loans: How HELB Is Locking Young People Into A Cycle Of Poverty

The Higher Education Loans Board (HELB) was created to lend a hand to disadvantaged students, however, it has ended up throwing away the key meant to unlock them from the chains of poverty. How? Well, let’s take a look at the journey of a HELB loan student beneficiary. One starts getting HELB money straight from the first year, HELB loans up to Ksh60, 000 per year but let’s use an approximation of Ksh 38, 000.

Multiply that amount by four years of school and at the time of graduation they have a debt of Ksh 172,000 to clear; that is without including any accrued interest. This is frankly not that bad considering that the alternative was missing out on a university education for lack of finances. However, this is where the honeymoon ends and a potential nightmare starts.

Delayed Employment

HELB gives students a grace period of one year from the date of school completion (not graduation), after which they are expected to start payments. According to a report by the Association for Development of Education in Africa (ADEA), one million young Kenyans join the workforce every year. On the same note, only one in five of them get formal jobs; the rest join the informal sector or engage in an occupation that doesn’t earn them a wage. That means that a majority of HELB beneficiaries are less likely to get a formal job within the first year of finishing school or longer.

Even for those that do get formal jobs, the situation isn’t any rosier, for every 100 working-age adults in Kenya, there are 81 dependants counting on their salaries. Even for the lucky ones that graduate and get entry-level jobs or internships that only pays them Ksh15, 000 per month; it’s not easy. Especially, if they have to commute to an upmarket place like Westlands in Nairobi (where there are no ‘kibandaskis’ (hotels) to grab a plate of chapati and beans for Ksh50). The bus fare and lunch alone is enough to cut salaries in half, and we have not yet counted NHIF, NSSF and HELB’s 25 % deduction made on salaries.

Accrued Interest and Penalties

I wonder how many students read and understand HELBs terms and conditions when applying for the loans. Immediately one gets their first HELB disbursement, a 4 % interest starts accruing on part of the amount given, but it doesn’t stop there. After the one year grace period is over, HELB charges a fine not less than Ksh5, 000 for every month you don’t pay them back. So for the HELB beneficiaries that are among the 800,000 young people entering the informal sector annually, this means a mountain of debt if they fail or can’t afford to repay the loan.

The same applies to anyone in formal employment who fails to remit their payments to HELB. Additionally, employers are also fined 5 % of the amount payable should they fail to remit loan payments. Currently, if beneficiaries fail to send payments to HELB for more than three months they will be negatively listed in the Credit Reference Bureau (CRB). CRB blacklisting anyone’s records hampers their ability to access loans, which is in most cases what is depended upon to help further their education; in the chase for higher pay and promotions.

On the other hand, even for those who have never applied for a HELB loan are required to get a clearance certificate from the loans board and this costs Ksh 1, 000 every year. You can’t apply for certain government jobs without the certificate. The cost attached to this is in bad taste, especially considering that the person who would have to fork out the Ksh. 1,000 for the certificate is unemployed. Also how hard can it be to check the system and get the information? This is not something that needs to be paid for by anybody, it should be a public service for free.

Higher Education Loans Board (HELB) image from


Since its inception in 1995, HELB has disbursed up to Ksh 72 billion to students, which is commendable. On the other hand, although it is true that numbers don’t lie, they also don’t tell the whole story. If you are fortunate enough to be around campus when HELB loans have been wired to students’ bank accounts, you will witness a phenomenon.

That’s when the school mess serving subsidized food grows empty while nightclubs take the opposite direction. It makes little difference even if it’s on a weekday or there is a statistics cat the next day. HELB money is synonymous with fiestas, new clothes, good food and having a good time; at least for a week and then things go back to normal. A significant portion of the overused music systems rattling windows in campus dorms in public universities have been financed by HELB, but is it worth it?

One solution is for HELB to have a mandatory class for students who have received HELB loans on financial management. These classes should explain to students what the penalties are if they don’t pay back the loans on time, the kind of interest that need to be paid and then maybe students can make better choices when it comes to spending the money.

Way Out

As of 2018, HELB beneficiaries owed the loans board Ksh8 billion, which prompted the Education Cabinet Secretary Amina Mohammed to announce a 100 % waiver on penalties for beneficiaries who pay back the money in lump sum. The waiver runs from May 3 to June 30, 2018. Beneficiaries should embrace such offers to rid themselves of the burden of carrying a debt at a young age. But at the same time, this period is too short as it favours only those with good jobs or businesses, people that can afford to pay everything in a lump sum. In this economy, how many would be able to do that, assuming that only a certain percentage of former students have stable, well-paying jobs?

According to the Daily Nation by last year HELB had 85,000 loan defaulters owing Sh9.6 billion. A total of 169,909 graduates had fully repaid their loans worth Sh13.2 billion by September 2017, while some 136,783 beneficiaries were servicing loans worth Sh20.7 billion. In 2017, HELB said it had received a surge in notifications from employers indicating retrenchment of their workers resulting in a dip in repayments.

With companies retrenching workers, some companies closing down their operations in Kenya and the lack of employment opportunities, it becomes difficult for many former students to meet their financial obligations to HELB. HELB should not jump at listing people with the Credit Reference Bureaus first, or charges unrealistic fines of Ksh. 5000 per month for those who fail to service the loan one year after finishing university. If somebody is struggling to pay the initial loan after one year, and many of the students have not gotten jobs after this one year, how do you expect them to raise an extra Ksh. 5000 per month to pay the fine. This is exploitation of the worst kind, HELB needs to meet and talk to its major stakeholders who are former students to find a way forward because what they are doing now is not right. Also the Parliamentary Committee on Education, Research and Technology also need to review the repayment terms because these fines are making things even worse for the youth, who are struggling just to put bread on the table.

Some of the heavy penalties beneficiaries are charged as a result of a lack of communication with HELB. For instance, when students take breaks from school through academic leaves without informing HELB, the loans board will expect them to have graduated at the date stated in their loan application. Hence they will start charging penalties for every month that they don’t receive the money due to them, all while the student is still in school for several years. This can be avoided by visiting HELB with the letter of deferment or academic leave, which is issued by the school. They will then reset the graduation year.

Debt is beneficial only if it is used well and can comfortably be paid back, here is Why You Need To Work On Clearing Your Debts.

Have you been struggling to pay back your HELB loan or been fined unfairly because you don’t have a job? Tell us your story.

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