Members of Parliament have expressed serious concern over the ballooning number of non-performing loans at the Higher Education Loans Board (HELB), with over KSh 33.2 billion now tied up in defaulted accounts.
During an oversight visit to HELB’s Nairobi office, the National Assembly Committee on Education heard that 293,122 loan accounts are currently in default—out of a total of 1.03 million matured student loans. The Committee, led by Chairperson Hon. Julius Melly, described the situation as a looming financial crisis that could cripple the future of higher education financing in Kenya.
“The magnitude of default is worrying. This is public money, and unless we urgently strengthen recovery mechanisms, thousands of deserving students will continue missing out on funding,” said Hon. Melly.
HELB CEO Mr. Geoffrey Monari told the Committee that the Board had disbursed KSh 26.1 billion to 322,338 university students and KSh 7.9 billion to 225,048 TVET trainees in the 2024/25 financial year. However, he admitted that over 160,000 eligible students were left unfunded due to a budget deficit of KSh 13.7 billion, partly worsened by the rising number of loan defaulters.
“We conducted a study and found that it takes an average of six years for some graduates to secure stable employment. Many others are underemployed, which complicates the repayment process,” Monari said.
Despite these challenges, HELB recovered KSh 5.21 billion this year—an 11% increase from the previous year—mainly through collaborations with the Kenya Revenue Authority (KRA), audits of employers, and tracing of defaulters using official databases. The agency also partnered with the Civil Registration Services to write off KSh 347 million in loans for deceased beneficiaries.
However, MPs including Hon. Eve Obara and Hon. Joshua Makilap said the recovery effort remains inadequate. They demanded to know how HELB is tracking graduates in formal employment and what mechanisms are in place to ensure compliance by employers.
“How are you working with the private sector and state agencies to ensure loan obligations are being met? This default rate is too high,” posed Hon. Makilap.
To address growing concerns, HELB revealed plans to introduce income-contingent repayment models and flexible payment structures for informal sector workers, including weekly repayment options. But lawmakers urged the agency to go further, especially in leveraging technology and data-sharing agreements with employers, professional bodies, and regulatory agencies.
The Committee also raised the broader issue of sustainability under the new Student-Centered Funding Model (SCFM), which allocates funds based on a student’s financial need rather than a flat-rate approach.
HELB Board Chairperson Hon. Ekwe Ethuro warned that while the SCFM is progressive, its implementation has significantly increased pressure on an already overstretched system.
“There is no predictable or scalable financing mechanism to match the growing number of students. Without structural changes, funding shortfalls will persist,” said Ethuro.
To remedy this, HELB has proposed legislative reforms to introduce either a dedicated student education levy on employers or ring-fence 3% of the existing VAT collections—borrowing from Ghana’s GETFund model, which allocates 2.5% of VAT directly to tertiary education.
As the Committee continues its engagement with HELB, members called for urgent action to fix gaps in loan recovery, enhance transparency in fund allocation, and restore public confidence in the student loan system.
“The default situation is not just a financial issue—it’s about the future of our human capital,” said Hon. Melly
