Helb CEO Charles Ringera on new student funding model

By Agencies

The government recently unveiled a new funding model for higher education that requires the Higher Education Loans Board (Helb) to apportion loans to students based on their need levels.

Helb CEO Charles Ringera spoke recently on the sector reforms, the headache of loan defaults and floating of a social education bond.

Under the new funding model for higher education, do loan applicants need to provide additional information other than what they have been providing in the past?

No additional information will be required. The current Means Testing Instrument (MTI) is adequate to classify the applicants into the four categories; vulnerable, extremely needy, needy and less needy. We currently conduct a lot of financial literacy to the students before they are able to access our application forms. There are three components that will be means tested — scholarships, loans and the bursaries. Hitherto, grants were never means tested.

Does Helb still fund students opting to study in universities in other countries, say Tanzania and Uganda?

We fund these students under the East African Community (EAC) protocol agreed on way back in 2010. Under the new funding model these students will not benefit from the scholarship but loans only just like students in Kenyan private universities or those in module two in public universities.

How does Helb determine whether the information provided by the applicants is actually the true picture of their situation?

In terms of validation, we have an Application Programming Interface (API) deployed to Integrated Population Registration Services (IPRS) –popularly known for generating the national IDs. The beauty with IPRS system is that once a person identifies herself or himself, then information on who their father and mother pops up. Currently we connect with KRA for validation of income levels. With the new funding model, we are connecting now to KNBS, NHIF and NSSF. We also want to work with telcos to add onto our points of validation.

Last year, the High Court stopped the Helb from imposing interest, penalties/fines exceeding the principal amount, terming it unconstitutional. Did the Helb file an appeal against this ruling?

No appeal was filed by Helb. Once Article 43 (f) of the Constitution was thrown in, stating that education is a basic human, social and economic right of an individual in Kenya, the case became a public interest one and there was no need to appeal any further. We left it at that and have now complied with the court and have aligned all our numbers.

For those who are still servicing their loans and are paying double of what they were given, Helb will waive the double or put a time stop on when it doubles. For instance, if we gave you Sh100,000, immediately interest and other charges reach Sh200,000, we stop.

In March, Helb indicated it was unable to finance some 140,000 students due to cash constraints. What is the status of loan disbursements to fresh and continuing students in the universities and TVETs in the current financial year?

This financial year, Helb has disbursed Sh9.98 billion to 228,293 undergraduate students against a targeted number of 234,758 so far. However, the total number of applications received was 305,498. This leaves 77,205 students with a resource requirement of Sh3.33 billion without funding.

For TVET students so far Helb has disbursed Sh3.8 billion to 108,378 students against the targeted 97,985 students. The total number of applications received was 144,426. This leaves 46,441 students with a resource requirement of Sh1.86 billion without funding. The funding gap still stands at over Sh5 billion for both university and TVET funding.

Overall Helb has disbursed Sh14.5 billion to 343,310 students against the targeted 339,347 students.

Any updates on the plans to issue a social bond to supplement State funds?

It is on course. We have now appointed a transaction advisor who has been on boarded through a procurement process. We are sensitising the new government on the issue of issuing a bond, because as you may recall the approvals were got under the fourth administration. We are very optimistic about the success of this bond as it is another avenue for financing education.

What percentage of the Helb funding comes from loan recovery?

Helb is supposed to be a revolving fund in which beneficiaries who have completed studies pay back to support a fresh group of students. Loan recovery currently caters to 32 percent of the student financing budget.

As of February 2023, accounts holding Sh8.45 billion were in default at Helb. How many loan defaulters is the agency currently dealing with?

Correction; the figure provided in February 2023 of Sh8.45 billion was for amount of loan forwarded to debt collectors for hardcore loan defaulters (over eight years in default). As at May 31, 2023 the number of loan defaulters Helb was pursuing was 148,064 holding Sh20.13 billion.

What’s the progress of plans to convert Helb into a bank?

That was seen as sustainability of the Helb, where we are also participating in the capital markets, and mobilising of deposits and resources. However, the legislative agenda has been a bit slow, with the Jubilee administration ending its tenure without having made much progress. In the current government’s manifesto, the plan appears to have changed where the talk now is on merging all funding institutions into one.

How long does it take for Helb to issue a clearance certificate upon clearing their loan?

It takes less than 15 minutes to issue a clearance certificate after confirming that the loan has been cleared. The process is automated and can be initiated online through the self-service portal. However, the physical clearance certificate has to be picked from the Helb headquarters or through any of the 28 Huduma centres where Helb has a desk.

Source: Business Daily