The recovery of student loans has been on the increase in Kenya from HELB following a stale situation where huge numbers of defaulters? Here is the breakdown of recovery steps HELB is doing to contain the situation:
Funding and Loan Statistics
HELB lent 606,329 students in the financial year 2023/24 at a total cost of KSh 33.45 billion. Since its inception, this brings the total number of beneficiaries to 1,696,781 with a total disbursement of KSh. 169.54 billion.
Loan Status as at Today:
- Total Loans Not Yet Due for Repayment: 710,107 borrowers, KSh 41.73 billion
- Total Loans Due for Collection: 986,674 loan accounts, KSh 127.81 billion.
- Active Repayment: 443,501 beneficiaries are in active repayment, and have repaid an amount of KSh 64.01 billion.
- Loans in Default: 298,511 accounts with KSh 32.81 billion are in default.
Loan Recovery Strategies
The various strategies through which HELB has been recovering defaulted loans include:
1. Communication and Outreach
Reminders through SMS, emails, social media, and telephone calls to remind the borrower of their obligation and inform them on repayment options.
2. Repayment Incentives
Exemption on the penalty waivers in HELB loans to prompt the borrowers for on-time repayments or in bulk.
3. Flexible Repayment Plans
HELB will have flexible plans of repayment pegged on the financial ability of individual borrowers – including income-driven plans, extended repayment plans, and temporary deferrals of payments.
4. Improved Monitoring and Recovery
HELB promises efficient monitoring of defaulted accounts with stronger measures, including litigation procedures, credit bureau reporting, loan recovery agencies, and other additional measures in enforcement and recovery.
5. Partnerships and Collaborations
It liaises with employers, financial institutions, and other stakeholders in creating loan repayment awareness and providing a facility for direct deductions from salaries or bank accounts.
Financial Literacy and Debt Management
HELB ensures that all applicants undertake some financial literacy to enable them to handle their debt effectively. Applicants must read thorough material on financial literacy and pass a test with a mark of 70% to proceed with their loan application.
New Funding Model
HELB has come up with a new funding model design and opened its application portal for the 2024/2025 academic year. The education fund puts in place mechanisms of reducing loss that might occur if a beneficiary passes before repaying the loan.
Requirements by Applicants:
- Valid email
- Valid telephone number
- KCPE and KCSE Index No.
- Passport photo details
- Details of parents/guardians, and guarantors
The strategies by implementing what HELB hopes the corporation can achieve are recovery of the defaulted loans, assurance that financial literacy is inculcated in the borrowers, and ensure that a loan system that is in a sustainable state is maintained for the future.