MPs Rejects a Bill to Lower the HELB Loan Interest Rate
University students who are beneficiaries of the Higher Education Loans Board (HELB) loans have suffered a major blow after MPs reject the bid to ease the repayment terms.
Gathogo Wanjiru 
A committee of the National Assembly on Monday rejected the proposed bill to reduce the interest rate charged on HELB loans to three percent.
The legislatures also rejected the bid to increase the repayment grace period to five years.
According to the Education Committee, if the Higher Education Loans Board (HELB) Bill 2020 is adopted, the board is at risk of recording a loss of Ksh693 million annually.
“The reduction of interest rate to three percent is likely to plunge the Board into a huge student funding deficit where many needy students will miss out on the funding,” it said in a report.
Under the proposed bill, the interest on the loans would have dropped from the current four percent, cushioning unemployed graduates from the Ksh5000 monthly defaulting fines.
The Bill was also taking away the power of setting interests rates from HELB and allowing the changes only to be made through government laws.
The committee rejected all the proposals terming them as ambiguous.
“Subjecting applicants’ interest rate approval to a third party creates a risk of reducing Helb’s revenue in the event that the interest rate is varied downwards,” reads the report.
The committee chaired by Busia Woman Representative, Florence Mutua, defended HELB arguing that the move to take away the powers from the board is against Section 6 of the Helb Act.
“In the event that the interest rate is varied downwards, Helb’s financial capacity to fund students will be grossly affected. This, therefore, requires the National Treasury to provide more budgetary allocations to Helb,” reads the report.
Currently, all Helb loan beneficiaries are required to start repaying within one year of completing their studies. The proposed Bill was to allow them to take a break before starting to pay the loan.
