President Uhuru Kenyatta has given reasons as to why he failed to assent to the Higher Education Loans Board (Amendment) Bill, 2020 which proposed lower interest for loan repayments for graduates.
In a memorandum to the National Assembly, Uhuru explained that he rejected the Bill based on a clause that proposed the restructuring of the loan repayment which would have seen many beneficiaries default on their loans.
He noted that the repayment of loans after securing employment, as proposed in the bill, would have been used as a leeway by some graduates.
"Delaying the date of commencement of repayment of student loans will consequently reduce the amount recovered by HELB as well as decrease the number of students funded by HELB annually.
"This is because graduates who are not in formal employment or those that are self-employed are not likely to declare that they are generating income and are likely to fail or delay repaying their loans," read the memorandum in part.
Further, Uhuru noted that many students were benefiting from HELB and the Bill needed to empower the institution to run on its own without relying on financial interventions from the government.
Consequently, President Kenyatta recommended that parliament does away with the clause before the Bill is returned to him for consideration.
"Since, loan recovery is a major component of resource mobilization for HELB and contributes immensely to the funding of needy students on an annual basis, it is imperative that the status quo is maintained to prevent over reliance on the exchequer.
"In view of the foregoing, I recommend that clause 2 of the Bill be deleted."
However, National Assembly speaker Justin Muturi, upon receiving Uhuru's communication hinted that graduates will have to wait longer before enjoying lower interest rates given that parliament is on indefinite recess.
"Pursuant to the provisions of Standing Order 42(2), I have directed the Clerk of the National Assembly to circulate the Message from H.E. The President to all Members, together with his reservations on the three Bills.
"The House being on Sine Die recess, the three Bills may not be reconsidered and shall therefore lapse at the end of the term of the Twelfth Parliament in accordance the provisions of Standing Order 141.' Muturi stated in his message to MPs.
