A new proposal was tabled in Parliament seeking to make changes in the Higher Education Loans Board (HELB) Act.
The proposal seeks to amend interest on loans and the repayment period.
Interest charged on student loans will be cut to 3% and the grace period for repayment increased to five years after graduation if MPs adopt the bill.
The loans interest currently stand at 4% and legislators feel that the Ksh 5,000 monthly fine imposed on defaulters is outrageous, considering how the nation was affected by the aftermath of the Covid-19 pandemic.
Many students have ended up being listed in the Credit Reference Bureaus (CRB) after failing to pay back the loans within the 1 year stipulated period.
"This proposal aims at reducing the financial burden on recent graduates who are expected to pay large sums of money to HELB even before securing employment or becoming financially stable," the bill states.
It further seeks to deny HELB the power of setting the loan interest charges.
This development comes three months after HELB waived the Ksh1,000 certificate acquisition fee demanded from non-loanees.
According to a letter signed by Charles Ringera, HELB resorted to the move after a series of stakeholder engagements where respondents termed the fee as punitive.
However, HELB is grappling with raising more money to support over 412,845 university students. The board is facing challenges of pushing defaulters to repay loans.
In January 2020, it stated that it missed its half-year collections target by around Ksh100 million to collect Ksh2.2 billion against the Ksh2.3 billion target.
