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Helb now goes after guarantors in student loan recovery plan

The Higher Education Loans Board (Helb) has begun pursuing guarantors of student loans as it seeks to recover billions of shillings from past beneficiaries.

The higher education financier has been piling pressure on the loan defaulters and guarantors, marking a change of tack in its strategy to collect the money it needs to plug a funding gap.

It has written to the loan guarantors reminding them of their legal obligation to ensure the loans are paid as specified in the contract agreements.

“We are contacting guarantors of those who are not easily traceable, probably living in a foreign country, or those who have failed to pay for more than 10 years,” said Helb chief executive officer Charles Ringera.

“The beneficiaries are expected to contact Helb and start paying the loan a year after completing college. In cases where we do not hear from them even after contacting them we are forced to contact the guarantors.”

BLOCKED DISBURSEMENTS

Last year, Helb began blocking disbursements to applicants whose parents had failed to repay the loans advanced to them during their time as students.

The agency said money would only be released into such students’ accounts after their parents resumed paying their loans.

The agency has over 85,000 loan defaulters owing Sh9.7 billion.

So far a total of 159,997 graduates have fully repaid their loans worth Sh12.3 billion while a total of 132,233 beneficiaries are servicing loans worth Sh19.8 billion.

Helb seeks to recover Sh4.12 billion in the current fiscal year ending June 30, 2017 and efforts to get guarantors involved are part of that plan.

The Treasury in its 2017/2018 budget proposal allocated Helb Sh10.1 billion, half the amount it requires in the coming fiscal year.

DIRECT ALLOCATION

Part of the allocation from the Treasury is Sh2.5 billion from loan recoveries and Sh6.6 billion from direct Treasury allocation.

However, the Treasury allocation and loan recoveries are not enough to finance the agency’s Sh19 billion budget in the next fiscal year.

Mr Ringera said Helb will continue to explore various options to have the defaulters settle outstanding debts. Helb has in the past involved employers in its funds recovery effort and traced defaulters using digital footprint, names and personal identification number at the Kenya Revenue Authority.

The agency has also offered amnesty in the past, allowing defaulters to pay a lumpsum without the accrued interest. Helb has also blacklisted loan defaulters with credit reference bureaus.

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SOURCE: Business Daily