The Higher Education Loans Board (HELB) is set to lose at least Ksh15 Billion in defaulted student loans due to job losses experienced due to the Covid-19 pandemic.
The Ksh15 Billion accounts for 26.9% of loans that risk falling into default according to data from the Ministry of Education that was published by the National Treasury.
The number is, however, a slim improvement compared to 28% recorded back in 2019 on non-performing student loans.Kenyans waiting for service at Helb officesBusiness Daily
The huge loss is bound to affect Helb's ability to offer student loans in universities and technical colleges, prompting allocation cuts.
Back in August, however, Helb revealed that it is set to expand its lending base despite the high default rate.
The Covid-19 pandemic that hit the country back in March negatively impacted the economy leading to numerous job losses.
The high rate of job cuts has not spared Helb beneficiaries who are bound to struggle making repayments with some currently not receiving any income.
The Covid-19 pandemic that has ravaged the economy is set to see more students apply for loans due to household incomes diminishing because of job losses, pay cuts and reduced business, according to Helb.
According to the report by the Ministry of Education, Helb admitted that the portfolio is at risk owing to the huge rate of default.
"Performance indicators show 26.9% of the Higher Education Loans Board portfolio is at risk," reads part of the report.
Legislators have been pushing to increase the grace period for Helb loans repayment to five years after graduation, to allow beneficiaries time to stabilize financially.
According to quarter two, Labour Force Report by the Kenya National Bureau of Statistics (KNBS) released in September 2020 the rate of joblessness doubled from April to June.
The number of those unemployed increased to 4,637,164 between April and June this year compared to 2,329,176 same period last year.Left to right: Kenyatta University entrance, Moi University building and Nairobi University towers.File
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