Before mobile loans, Helb was the first debt

By the time Waragi, an aspiring young writer and poet, completed his secondary education, his father had retired and could not afford to finance his education at a private university. The best option was to qualify for government sponsorship, where the Higher Education Loans Board (HELB) would cover his tuition and living expenses.

This hope is shared within his village, where most families can barely manage to send their children to primary school, let alone high school or college. In many Kenyan households, sponsorships, at times from concerned relatives or friends, the church, and increasingly through WhatsApp groups, are relied upon, along with government assistance.

HELB role in university education

Founded in 1995 through an Act of Parliament, HELB has been addressing this need by providing financial assistance to individuals pursuing higher education, primarily focusing on students with financial constraints who aspire to continue their education but whose parents couldn’t afford their further studies.

The financial aid is distributed in the form of loans, bursaries, or scholarships and is expected to be repaid after the completion of the student’s education. Initially, only government-sponsored students admitted through the Joint Admissions Board were eligible for financial support, and Waragi qualified under these terms.

However, to broaden the reach and assist more students, the government expanded HELB’s scope to include self-sponsored students and those pursuing diploma courses in technical institutions. The government also extended funding to support all students who achieved a grade of C+ or higher.

This expansion, although well-intentioned, has strained the funding model that was instrumental in providing an opportunity for children from low-income households to pursue higher education. It played a vital role in creating a level playing field for social mobility.

HELB was also a student-friendly lender that imposed only a 4 percent compounded interest rate, offered a grace period, and provided penalty waivers to students facing financial difficulties. For many Kenyan students, HELB served as their introduction to financial matters.

Read also: SHE Leads at the heart of Kisumu’s resurgence

Mobile digital loans

This marked the first occasion when Waragi shared with me his experience of dealing with finances, a time when he had to open a bank account and apply for a KRA PIN, unlike the present, where children own mobile phones and may have already used M-PESA or even borrowed a digital loan on their devices.

Depending on each student’s unique needs and financial circumstances, they qualified for a specific amount of funding. In his case, he was eligible for the maximum allowance, which amounted to Kes60,000. He used approximately Kes30,000 for annual tuition fees, while the remainder was intended for his living expenses, or at least that was the expectation. Every year, HELB consistently disbursed the funds on time, a vital aspect for him and his family, who highly valued education. Thanks to this support, he successfully graduated with a degree in his chosen field.

Approximately six months after his graduation, he faced the obligation of making his first repayment towards the loan, a responsibility he took seriously.

“One of the most significant lessons I learned through this process was responsibility. My father asked one of his close friends, an elder in the community, to provide a guarantee for my HELB loan. So, as I was repaying it, I always kept in mind that it had been guaranteed by a highly respected member of our community. This sense of obligation motivated me to start repaying the loan as soon as I could. I couldn’t bear the thought of them seizing his property because I couldn’t fulfill my part of the agreement,” Waragi reflected.

Missing Helb loan repayment

At the time, he was completing internships for about three years and decided to set aside one thousand every month to repay the loan. He maintained discipline and was well aware of the hefty fines, sometimes exceeding Kes10,000, that accompanied missed payments.

This situation came with its share of pressure. Young students can secure internship positions based on their limited experience, most of which are unpaid, except for a few employers willing to provide a transport allowance. Considering all these factors, it can be challenging to keep up with payments, especially when trying to make ends meet without a regular income.

When I inquired if this had an impact on his mental health, he acknowledged that anxiety was present. However, he saw it as a part of life and recognized that it helped him gain insights into how financial systems operate and the consequences of failing to repay.

“In as much as I would have preferred a more lenient approach to repayment, I understand that they are concerned about creating a ‘moral hazard.’ Allowing a longer grace period might not be beneficial, as people would just request extensions, essentially stretching a handshake to the elbow, so to speak,” he remarked when I asked if he believed the grace period should be extended. Eventually, he got a good job, completed his payments, and got a clearance certificate from HELB.

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