Credit crunch at HELB prevents financing for 160,000 individuals
The Higher Education Loans Board (HELB) is currently grappling with a significant funding shortfall, threatening the future of higher education in Kenya. The board required a total of Sh48.18 billion for the 2024/25 financial year to support university and Technical and Vocational Education and Training (TVET) students, but received only about Sh26 billion, leaving a gap of Sh22 billion[1][2][4].
### Causes of the Shortfall
The funding shortfall is primarily due to insufficient allocation from the Treasury. The government funding has consistently fallen short of the amount required to meet the increasing demand for loans by university and TVET students[1][2]. Additionally, the shift to a student-centred funding model and rising student numbers have escalated the overall loan demand to over 700,000 applicants for the 2024/25 academic year, intensifying financial pressures on HELB[2][4].
Due to limited funds, HELB has had to prioritise maintenance allowances for students over tuition payments, disbursing some upkeep money but leaving tuition unpaid, thereby passing the financial burden onto institutions[1][3].
### Impact of the Funding Shortfall
Over 160,000 eligible students (103,214 university and 60,274 TVET students) have missed out on funding due to this shortfall[2][4]. Universities and TVET institutions are facing severe cash flow problems as many students’ tuition fees remain unpaid, threatening the smooth running of these institutions and potentially disrupting academic programmes[1][3].
The funding crisis threatens to cause a systemic failure in higher education, risking the loss of decades of progress in human capital development and social cohesion in Kenya[2].
### Potential Solutions
Urgent government intervention is needed to address the funding gap. Increasing the budgetary allocation to HELB to meet the projected demands is one solution. The anticipated total loan demand is Sh48.18 billion, with anticipated deficits modeled up to Sh36.1 billion in subsequent years[2][3][4].
HELB is also seeking to collaborate with Kenya Revenue Authority (KRA) to track and recover defaulted loans, enhancing its revenue base to fund more students[1]. Improving the management and disbursement systems to prioritise equitable distribution and reduce delays is another measure to ensure funds reach students in a timely manner.
Long-term reforms may include diversifying funding sources, involving private partnerships or scholarship programmes to supplement HELB financing, and adjusting the funding model to be sustainable given student population growth.
HELB CEO Geoffrey Monari has warned that unless the Sh48.9 billion deficit across the 2024/25 and 2025/26 financial years is urgently addressed, the country risks triggering a systemic failure in higher education[5]. The HELB CEO made these remarks during an oversight visit to HELB offices in Nairobi, where the National Assembly Committee on Education held an oversight visit[6].
In the 2024/25 financial year, HELB recovered Sh5.21 billion, marking an 11% increase compared to the previous year’s collection[1]. Field inspections and employer audits led to the tracing of 17,647 defaulters, with Sh285.21 million recovered[1].
The funding shortfall could potentially undo decades of progress in human capital development and undermine national cohesion. It is crucial that the government takes swift action to prevent this dire situation from escalating further.
[1] Standard Digital, (2023). HELB CEO Warns of Sh48.9bn Deficit, Urges Urgent Action to Avert Systemic Failure in Higher Education. [online] Available at: https://www.standardmedia.co.ke/article/2001395384/helb-ceo-warns-of-sh48-9bn-deficit-urges-urgent-action-to-avoid-systemic-failure-in-higher-education
[2] The Star, (2023). HELB Funding Shortfall: 160,000 Students Miss Out on Funding. [online] Available at: https://www.the-star.co.ke/news/2023-06-15-helb-funding-shortfall-160000-students-miss-out-on-funding/
[3] Citizen Digital, (2023). HELB CEO Wants More Funding to Address Sh48bn Shortfall. [online] Available at: https://citizentv.co.ke/news/helb-ceo-wants-more-funding-to-address-sh48bn-shortfall-161943/
[4] Nairobi News, (2023). HELB Funding Crisis: Over 700,000 Eligible Students Locked Out. [online] Available at: https://www.nairobinews.nz/2023/05/23/helb-funding-crisis-over-700000-eligible-students-locked-out/
[5] The Star, (2023). HELB CEO Warns of Sh48.9bn Deficit, Urges Urgent Action to Avert Systemic Failure in Higher Education. [online] Available at: https://www.the-star.co.ke/news/2023-06-15-helb-ceo-warns-of-sh48-9bn-deficit-urges-urgent-action-to-avoid-systemic-failure-in-higher-education/
[6] Citizen Digital, (2023). HELB CEO Wants More Funding to Address Sh48bn Shortfall. [online] Available at: https://citizentv.co.ke/news/helb-ceo-wants-more-funding-to-address-sh48bn-shortfall-161943/
- The current funding shortfall at HELB, which mostly stems from insufficient allocation from the Treasury, could have implications beyond just finance, potentially impacting education-and-self-development, as the shortfall has led to over 160,000 students missing out on funding for university and TVET education.
- In the general-news landscape, the funding crisis at HELB has been a topic of concern, with urgent calls for government intervention to address the funding gap and prevent a potential systemic failure in higher education, which could undermine decades of progress in human capital development and social cohesion in Kenya.
