HELB Steps Up Efforts to Recover Loans, Invites Firms for Debt Collection Services

The Higher Education Loans Board (HELB) is taking serious steps to recover unpaid loans from students. With increasing difficulties in getting back these funds, HELB has announced it will hire outside firms to help with debt collection.

According to a recent public notice on MyGov, HELB is now inviting companies to submit bids for a two-year contract to manage debt recovery.

The deadline for these bids is October 1, 2024. The agency has posted detailed tender documents on its website, and companies interested in the job must inform HELB via email about their participation.

HELB operates a revolving fund system, meaning it relies on loan repayments from former students to fund new ones. However, due to rising economic challenges, more graduates are defaulting on their loans. This situation has put a strain on HELB’s financial resources, making it harder for the agency to support new students who need financial help.

Dr. Vincent Gaitho, the Pro-Chancellor of Mount Kenya University, recently highlighted that government funding for state-sponsored students in private universities has been reduced. Over the past eight years, this funding has dropped from Ksh70,000 to Ksh40,000. This reduction in funds adds to the financial strain faced by institutions and students alike.

In the 2023/2024 fiscal year, HELB provided financial aid to 606,329 students, amounting to Ksh33.45 billion. Since HELB was founded, it has supported a total of 1,696,781 students. Despite these efforts, the growing number of defaulters is now putting HELB’s ability to continue funding higher education at risk.

The new move to hire debt collection firms comes as HELB faces mounting challenges. The external firms will be tasked with recovering unpaid loans, which is critical for maintaining the agency’s financial stability. The hope is that by outsourcing these services, HELB can improve its recovery rates and ensure that the revolving fund remains sustainable.

The outcome of this new strategy will be closely watched by all stakeholders involved. If successful, it could provide a model for other institutions facing similar challenges. 

However, the effectiveness of these measures will depend on the ability of the selected firms to recover a significant portion of the outstanding loans.