The Higher Education Loans Board (Amendment) Bill (National Assembly Bill No. 10 of 2023) was read for the first time on August 9, 2023. It has been referred to the house committee for public participation.
The amendment bill is seeking to amend the Higher Education Loans Board Act, No. 3 of 1995.
In this case, it seeks to waive the imposition of interest on the principal amount of a loan advanced to the youth and persons with disabilities until one secures their first employment.
In addition, the amendment bill also proposes that the percentage of interest charged on the loan is advanced at 3%.
Also Read: Why 2,000 Students Will Miss HELB Loan
It further provides that the penalty charged on loans that have been defaulted shall be charged only after the defaulter secures employment. One is also given a grace period of five years after completion of studies.
The amendment bill that now awaits public memoranda is already in the committee stage.
In addition, the aim of the bill is to ease the financial burden on fresh graduates who scramble for the limited job opportunities in the market owing to the high unemployment figures in the country.
Current HELB Interest rate
The current interest rate of HELB loans is 4% per annum and the student is expected to start repayment after completion of studies or when HELB recalls it.
HELB provides that any person awarded the loan can start repayment as soon as possible if he is able to.
There is a grace period of up to a year after completion of studies within which the Board may decide to recall the loan whichever earlier.
However, you can make voluntary payments before or after you complete your studies to reduce your loan balance.
After the expiry of the grace period, the loan shall attract a penalty of Ksh. 5000 for every month defaulted. Defaulters are eventually listed on the Credit Reference Bureau and won’t be allowed to access any loan from other financial creditors.
The number of HELB defaulters stood at 120,000 with an amount of Ksh. 8.5 billion owed by beneficiaries.