2020 HELB: MP Now Wants HELB Interest Rates Reduced from the current 4% to 2% per Annum
If the HELB Amendment Bill Goes through, HELB Loans will be Cheaper and Easy to Service
Nominated MP Gideon Keter has come up with a bill proposing to have the Higher Loans Education Board, HELB reduce its interest rates from the current 4% per year to 2 %.
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HELB however has greatly opposed this bill claiming that the lower interest rates are likely to lockout over 47, 000 students who are currently benefiting from the board.
Currently, students who default are charged a 4% interest rate per year which according to HELB helps the board generate at least 3.74 billion annually, money which is used to fund the studies of tertiary level students who are yet to graduate.
If the bill goes through, HELB says that the National Treasury will be obliged to bridge the gap that is likely to surface and finance the studies of students who are likely to be affected by the lowered interest rates.
This consequently means that the National Treasury will have to set aside Kshs 1.87 billion yearly to facilitate the ongoing HELB programme.
HELB Interest Rates
The maximum interest rate charged by the Higher Loans Education Board, HELB stands at 4 per cent of the Principal amount per annum.
According to HELB’s data, the total amount of interest generated per annum is Kshs 3.74 billion which is collected from the Kshs 752, 327 owed to the Board.
The total amount of money owed to HELB is 93.6 billion.
So far, over one million Kenyan students have benefitted from HELB loans. This translates to Kshs 113 billion spent on the students.
By February 2020, there were over Kshs 492, 227 mature loans that should be cleared by HELB beneficiaries who are ready to settle their debts.
Another group of HELB debtors who owe the Board Kshs 184, 046 are already actively paying their loans. This batch will not be charged interest rates. They are exempted from HELB penalties.
Currently, HELB has a total of Kshs 76, 054 defaulters.