A Bill that seeking to give reprieve to graduates in order to repay their loans after securing their first job upon graduation or after becoming financially stable has already had its first reading in parliament.
The Higher Education Loans Board Amendment Bill being sponsored by Machakos County Women Representative Joyce Kamene, aims at lowering the financial burden of fresh graduates and youths caused by outstanding HELB loans.
The Bill had its first reading on Wednesday, July 26, 2023 in Parliament.
Apparently, loan beneficiaries start repaying loans after a year or can also make voluntary payments before or after they complete their studies.
Additionally, if approved, students with loans from the board will only be subjected to a three per cent interest rate after securing employment which is completely different with the situation now where students are charged an interest rate of 4 per cent per year.
“The maximum interest rate to be charged by the Board on the principal amount advanced to a loaned person shall not be more than three percent per annum,” reads part of the Bill.
According to the proposed bill, a penalty for defaulting on loans shall be charged after one is employed or five years after completion of studies.
Notably, any loaned graduate who fails or neglects to satisfy the requirements outlined in the Act is guilty of an offence and liable to a fine of not less than Ksh5, 000 for each unpaid loan deduction.
The bill further seeks to amend the HELB Act No. 3 to require HELB not to deny any student who is below 18 years from applying for HELB loan.
The law suggests that HELB loan applicants below 18 years who do not have an identification card be allowed to use their parent’s or guardian’s ID numbers as co-signatories to sign the loan agreement.
Currently, HELB only allows students over the age of 18 to apply for loans, as a national Identification Document (ID) number is a mandatory requirement for signing the loan application agreement.
By Thuita Jaswant & Vostine Ratemo
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