NAIROBI, July 21 – The Higher Education Loans Board Monday extended its loan facility to self sponsored students who were employed but faced with cash flow challenges.
Chief Executive Officer Benjamin Cheboi said this would be given to professionals enrolled in parallel programmes in public and private chartered universities and were in a position to repay their loans through a check off system.
“The loans will be paid directly to the Universities as tuition. The current applicable interest rates shall be 12 percent annually,” he said.
“We are looking at a situation not of need but of ability to pay. Many people in this category would like to apply for loans in financial institutions but sometimes they find it difficult to get them.”
Cheboi added that parallel students who were direct entrants from secondary schools were now also eligible for the loan but have to be financially needy. The applicable interest for these students would be four percent annually.
The board also reviewed upwards the maximum loan amount from Sh55, 000 to Sh60, 000.
“There is also a bursary component of a maximum of Sh8, 000 that means if a student is judged to be very needy he will get a maximum loan of Sh60 000 and a maximum bursary of Sh8 000 adding to Sh68 000.
He said the board was in a position to avail these loans since the government had increased the allocation from Sh867million in 2007/2008 financial year to Sh1.367 billion in this fiscal year.
“The board expects to increase its loan recovery from Sh1.3 billion in 2007/2008 financial year to Sh1.7 billion this financial year,” he said.
“These funds will be used to meet the lending requirements for the 2008/2009 financial year in addition to funds received from the exchequer.”
He noted that only 26,720 Kenyans had completed servicing their loans since its inception in 1974 while another 70,000 were currently repaying.
“The board has put in place mechanisms to ensure that the 55,000 beneficiaries currently not repaying their loans do so.”
Cheboi said the cumulative amount lent to students since 1974 is Sh22 billion of which Sh7.5 billion has been fully recovered, another Sh7.5 billion is currently being serviced while Sh7 billion is outstanding.
Cheboi warned that the board would place the names of all defaulters on its website for public access.