Employers who fail to deduct and remit Higher Education Loans Board (HELB) repayments from their employees risk facing heavy financial penalties under Kenyan law, as authorities step up enforcement of student loan recovery.
In an explainer shared in a video viewed by The Kenya Times, lawyer Danstan Omari said the law imposes strict duties on both graduates and their employers to ensure student loans are paid on time.
He said many Kenyans remain unaware that employers can be punished for failing to deduct HELB repayments from staff salaries.
Over 80 percent of university graduates in Kenya were funded by HELB, with the law imposing strict responsibilities on both graduates and their employers to ensure student loans are repaid on time.
HELB Fines for Non-Compliance
Under the Higher Education Loans Board Act, a graduate who benefited from a HELB loan must, within one year of completing studies, inform the board of their physical and contact address.
The graduate must also start repaying the loan within that period, along with any accrued interest.
If the graduate is in formal employment, the law requires them to authorise their employer to deduct the loan repayment directly from their salary and remit it to HELB.
Omari said many employees wrongly treat HELB funding as private information that does not concern their employer.
“That is not true in law. Once you are employed, your employer must know whether you are a HELB beneficiary so repayment can start,” Omari stated.
Failure by a graduate to start repayment is an offence.
The penalty is a fine of not less than Ksh 5,000 for each month the repayment remains unpaid.
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This means a loanee who defaults for one year pays at least Ksh60,000 in penalties, excluding interest and the principal loan.
Over the years, penalties can surpass the original loan amount, which usually ranges from Ksh200,000 to Ksh300,000.
Employer’s Role in Debt Collection
However, Omari stressed that the burden does not rest solely on the employee.
Employers carry a direct legal obligation once they hire a graduate.
Within three months of employment, an employer must inform HELB in writing that they have employed a graduate and provide the required details.
After HELB confirms that the employee is a borrower, the employer must deduct the loan repayment from the employee’s wages and remit the money to the board.
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The remittance must be made within 15 days after the end of each month.
An employer who fails to deduct or remit the money commits an offence. Such an employer is liable to a penalty of Sh5,000 for every month the deduction remains unpaid. In addition, the law provides for a further penalty of five per cent of the total unpaid amount for each month the repayment is delayed.
Concerns about employee privacy do not excuse non-compliance. Omari said the law is clear that employers must share employment details with HELB, including the employee’s full name, identity number, and university attended.
Lawyer Danstan Omari further added that enforcement has been strengthened through cooperation with the Kenya Revenue Authority (KRA).
At the request of HELB, KRA can provide information on borrowers and their employers.
With identity numbers and KRA PINs linked to employment records, tracking defaulters is now easier.
Omari also warned job seekers to regularise their HELB status.
Graduates applying for government jobs and many private sector positions are required to present a HELB clearance certificate.
Those who were never funded, including graduates from private or foreign universities, must obtain official clearance confirming they did not receive a loan.
