University Loans Defaulters In Diaspora to be Traced
The Higher Education Loans Board has set its sights on defaulters living abroad after the debt collectors it hired two financial years ago helped recover Sh455 million.
The agency said recoveries from bailiffs grew by nearly a fifth to hit Sh245 million in the fiscal period ended June from Sh210 million a year earlier, when the plan to hire three debt collectors was piloted.
Helb chief executive Charles Ringera said the revolving fund is currently appraising bids to hire an additional five debt collectors to smoke out loan defaulters who currently owe the agency a total of 9.7 billion.
Most of the recoveries by debt agents were from Kenya, Helb said, adding that most defaulters are holed up abroad and need to be traced to pay their education loans.
“We are strengthening to add another four to five and mainly targeting diaspora. It is now that our strategic posture is pursuing these new growth markets,” said Mr Ringera in an interview with the Business Daily.
“We are currently evaluating another set of debt collection companies and they should be on board by mid-October.”
There are currently a total of 85,364 loan cheats, Helb said.
However, Helb declined to reveal the identity of the debt collectors and the commission they earn on recoveries, saying the information is “confidential.”
Mr Ringera said the decision to hire more bailiffs to recover debts from past students was informed by the performance of the debt collectors during the inaugural two-year period.
The cash recovered from loan cheats last year represents 6.1 per cent of the total Sh4 billion collected by Helb.
The State agency is tightening the noose on loan cheats to help plug a funding gap exacerbated by the growing population of learners in need of student loans, and the expanded mandate of Helb in higher education financing.
A total of 159,997 graduates have fully repaid their loans worth Sh12.3 billion, Helb disclosed.
Helb said it is currently supporting 81,000 freshers with loans worth Sh3.2 billion, while 150,000 continuing students are gobbling Sh6.2 billion, and 3,000 post-graduate students will be given loans worth Sh350 million.
A total of 132,233 beneficiaries are currently servicing loans amounting to Sh19.8 billion, according to Helb data.
Helb already has information sharing agreements to access the databases of Kenya Revenue Authority, National Hospital Insurance Fund, and National Social Security Fund to trace past loan beneficiaries.
Companies are fined Sh3,000 per month for each defaulting employee if they do not disclose to Helb that their employees are past beneficiaries.
Those not servicing their loans one year after graduation face a monthly fine of Sh5, 000 coupled with accrued interest at the rate of four per cent per annum.
Public universities admitted 74,046 freshmen this year compared to 24,221 in 2010; with a majority of these learners seeking funding. There are now 70 universities in Kenya, according to official data, up from 26 in the year 2004.