The Higher Education Loans Board (Helb) has embarked on an aggressive process to recover more than Ksh10 billion that beneficiaries have not paid for over 10 years.
Helb Chief Executive Officer (CEO) Charles Ringera confirmed on Tuesday that the tough recovery measures include prosecuting ‘hardcore’ defaulters.
According to Ringera, hardcore defaulters are persons who have not been servicing their student loans for at least 10 years since completing their studies.
The state corporation that falls under the Ministry of Education says it has filed cases in court against five hardcore defaulters, and plans are underway to sue many others who have remained nonresponsive despite numerous reminders.
“It is not until the tenth year – after listing the defaulter with credit reference bureaus and efforts of private debt collectors fail – that Helb takes the extreme measures,” the Helb boss said in an interview with The Standard.
“When private debt collectors are unable to trace or get where you are, on about the tenth year, which is actually supposed to be the life of the loan, we now start taking prosecution aspects.”
Helb beneficiaries are required to start repaying their loans a year after completing their studies. Unpaid loans accrue Ksh5,000 penalties per month.
Ringera noted that the 12-month period is meant to allow beneficiaries to settle down before starting repaying the loan.
“Finish your school on fourth-year then you are given one year to settle. So that time, nobody is even harassing you,” said Ringera.
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After one year, Helb starts sending reminders to beneficiaries with some honouring their pledges while others choose to ignore them.
Helb, he said, normally sends beneficiaries’ data to private debt collectors on the eight-year of non-payment.
“We chase one another for like three years before now we say this debt is now approaching hardcore,” the CEO said.
“However, if during the intervening period, you have actually been able to see us, then nobody will list you.”
Some of the persons targeted received their loans as far back as 1979. Despite being blacklisted with Credit Reference Bureaus (CRBs) they have not made efforts to clear their loans.
In the new crackdown, Helb says, it’s relying on other agencies like the National Transport Safety Authority (NTSA), National Hospital Insurance Fund (NHIF) and the Kenya Revenue Authority (KRA) to track and flag defaulters.
“On KRA, you can see they are paying taxes, on NTSA you can see they are buying their Subarus. This is how we are chasing one another. That is why we become a little bit hard in terms of even thinking about prosecution,” Ringera added.
Helb recently announced a 100 per cent waiver on penalties citing the effects of Covid-19 effects on the economy.
In November 2019, Ringera faced a backlash after threatening to name and shame defaulters in newspapers.
“Some beneficiaries who are in default have not responded to previous communication …therefore sustained default, hinders funding of other deserving Kenyan youth,” Ringera said then.
In the past, graduates have decried unemployment as the main reason why most fail to repay their loans.