The Head of State also rejected the proposal requiring those who can’t repay the loan to notify the board and swear an affidavit expressing their inability so that the loan does not earn interest/FILE
In a memorandum on the Higher Education Loans Board (Amendment) Bill, 2015, President Uhuru Kenyatta said creating a category of students who will automatically qualify for government loans amounts to preferential treatment of applicants, which will be discriminatory and expensive.
“Even if the proposal were legally tenable, its sustainability would require substantial financial support from the National Treasury which is hardly feasible given the budgetary constraints,” said the President in a memorandum read to the House last month.
He said HELB had a duty to respect individual applicants and vet their suitability for a loan.
The Head of State further rejected a proposal by MPs for minors to get the loan.
The Head of State also rejected the proposal requiring those who can’t repay the loan to notify the board and swear an affidavit expressing their inability so that the loan does not earn interest.
Currently the HELB Act requires applicants to start paying back within a year of completing their studies between 48 and 120 months depending on their nature and amount of the loan.
President Kenyatta is also seeking the removal of a clause that sought to grant amnesty to graduates, who fail to secure employment within one year of completing studies, so long as they notify the Board in writing in order to escape the penalties charged on defaulters.
“It will be extremely difficult for the board especially in cases where loanees are in the informal sector or are self-employed, or where they live and work outside the country and is likely to cost the board a lot of valuable income,” said President Kenyatta.
In his amendment, Kiharu MP Irungu Kangata wanted to suspend the four percent annual interest rate charged on the loan until the students get a job or a way to pay back the money.
“Failing to repay a loan is very punitive, because your name is taken to the Credit Reference Bureau. So they have to swear an affidavit every year that they have no job, so that they are exempted from paying interest on the loans,” Irungu said in August when the Bill was approved.
Under the current legal framework, loanees are required to commence repayment of loans within one year of completing studies or within such longer period as the board may deem appropriate to recall the loan, making it unnecessary to legislate afresh on the matter.
President Kenyatta has also rejected the proposal to expand the HELB membership to include two student representatives – one each from the public and private universities
The National Treasury set aside Sh7.5 billion for this financial year to cater for 135,000 continuing students and the freshers, but HELB says it needs additional Sh2 billion to fully finance the programme.
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