December 13th 2017

Society / Education

HELB on the spot as university students loan delays become rampant

This website learnt about the cases of students who had their loans approved in December 2016 but are yet to receive the funds as of this month. For a process that under regulations should take no more than three months, in some cases student loans are processed for up to five or six months.

By Free Press Reporternewsdesk@kenyafreepress.comFriday, 12 May 2017 16:28 EAT

HELB sponsored students queue up at the institution's front desk to confirm the availability of funds in their bank accounts.

University students who depend on loans from the Higher Education Loans Board face increasing challenges accessing their funds once these have been approved. Due to growing inefficiency within the Board, the transmission of funds from the institution's bankers to students’ bank accounts is increasingly delayed, destabilising the finances of many students and parents.

Several students from poor families have been forced to defer their courses after missing crucial examinations due to delays in the loan disbursement, a problem that has become acute at the Board in the last two years, according to our investigations. As a result of the problems, HELB currently receives more complaints than its officials can handle, and the management has failed to institute a procedure of recording complaints from the institution’s users.

What the Board has done is create more front office desks dedicated to handling of student complaints, but the junior staff normally do not have satisfactory answers in cases where problems stem from violation of the Board’s loan processing procedures.

The Kenya Free Press reviewed cases of at a least a dozen students whose loans didn’t reflect in their bank accounts long after the funds had been released, and all the cases were in two commercial banks among the Board’s approved list.

This website learnt about the cases of students who had their loans approved in December 2016 but are yet to receive the funds as of this month. For a process that under regulations should take no more than three months, in some cases student loans are processed for up to five or six months.

The most affected institutions, according to anecdotal information from the students whose details we perused, are applicants from the newly-established public universities such as Dedan Kimathi, Maasai Mara, Rongo and Laikipia.

Contacted by this website about the student problems, HELB spokesperson provided standard information about the Board’s operations but did not address the matter of systematic violation of the board’s procedures in a manner that points to gross incompetence and corruption.

The rapid expansion of universities and high student enrolment over the last eight years have put HELB under pressure to provide loans to all qualifying students. The government has tried to meet the huge shortfall by sharply increased funding to the agency, which has in turn adopted robust measures of recovering loans to former students currently in salaried employment or business.

Concomitant with the government's rising allocation to HELB, the institution has also the minimum and maximum allocation for qualifying students to cater for high inflation in the economy. In 2016/17, the Treasury allocation Sh1.6 billion more over 2015/16 financial year, reaching Sh9.1 billion. Allocation for HELB in the 2017/18 financial year has risen further to Sh10.1 billion. HELB also receives increasing funds from loan recoveries.

Since the board's establishment, disbursements to students ranged from Sh35,000 to Sh50,000 per academic year, with Sh8,000 paid directly to the universities for tuition while the balance is deposited in two equal tranches in the beneficiary’s bank account to cover first and second semesters. In 2016 HELB reviewed its loan allocations to a minimum loan of Sh40,000 and a maximum of Sh60,000 per year.

Despite this progress, HELP still can’t manage to finance all students needing help, and the increased student numbers have posed new problems. In the past when the board financed only regular students in public universities, HELB could estimate the number of applicants at the admissions stage since the number of students joining the colleges was tied to bed capacity.

These days, the fund caters for students in public and private universities and even some tertiary colleges, and has no way of knowing how many students would apply in a given semester, so it has to wait for colleges to supply the list of students.

Yet for HELB to start the loan review process, it needs to know how many students will need the loans and how much. It instituted a policy of receiving at least 90 percent of targeted applications before it opens them for review. After this stage, the board takes between three to four weeks to make its decision.

This timeline is incumbent on their being money, and HELB’s fundamental funding comes from the Treasury allocations. If the government funds delay, and happened in September 2015 when the government delayed the disbursement of Sh4 billion, HELB can’t proceed with the process.

HELB can also delay the disbursement of funds to students where information is incomplete, where mistakes are identified in dates, ID numbers, wrong bank accounts or even students transfer courses and fail to update their information at the Board.

Away from these challenges, this website has learnt that HELB also faces growing inefficiency and suspected corruption affected the movement of funds from the institution’s account to commercial banks and eventually student accounts.

According to well-placed sources, the loan disbursement system has come under abuse, with senior officials colluding internally and externally to keep money already awarded to students for longer in commercial banks. Several successful students then can’t access their loans in their bank accounts even as HELB records show the money has been deposited in their accounts.

When confronted with a question about how this happens, HELB communication manager Wavinya Muigai demanded the names of affected students and asked that they be informed to appeal to her office. However, as the students wanted their identity protected, only one allowed us to supply his information to the spokesman.

This particular student applied for a HELP loan in September when he joined Maasai Mara University as a freshman. In December, HELB detected an error of the missing ID copy of his mother, which his dad corrected immediately. The following month, HELB confirmed that his loan application was successfully.

When the student did not receive the money in sixty days, he inquired from HELB and each time HELB said the money would be disbursed “shortly”. Eventually on Friday April 21, a HELB officer called to inform him the money would be in his account on Monday April 24. 

When the money didn’t reflect in the count as promised, his dad went to HELB on Tuesday 25 and was told by the same officer who had called that the money “should be” in the account. The lady officer said the money had been released to the student’s bank account.

A few days later on Friday and there still being no money, he went to HELB to check what the matter was. A different officer read from the same computer the previous had read from and said the money had been remitted to the student’s account.

The following Monday, he went back and another officer said this time that the money had delayed but would be in account by May 5. By this time, time was running out for the student to register for exams on May 8. The dad went to HELB on the morning of the 8th to check whether the money had been sent.

A reporter from Kenya Free Press who was already in contact with HELP officials over the complaints also visited the Board's offices at Anniversary Towers and was shocked by the sheer number of students, some sleeping on the couches, others crying in HELB’s front office section upon realizing that their funds were still not available.

We had received by then information about several students who have had to defer semesters because of delays in HELB disbursement of funds already approved and, in the Board's own communication, already sent to student accounts. Ms Muigai declined to state how many of such cases HELB was aware of.

The instruction HELB sends to its approved commercial banks is like the one the government uses to pay salaries, which can be in a single spreadsheet for each bank for a particular batch of students. Normally, when the board gives instructions to banks it has satisfied itself that the details are accurate and the funds are available for the respect bank to make payments to students using its accounts.

As it happens, many students normally can’t access the funds. The explanation could be either HELB calls for money it doesn’t have or the banks, for some reason, sit on HELB money. “The finance mangers have not explained this satisfactorily. The explanations we have so far cater for delays before approvals, which though unacceptable are easy to understand,” said a finance specialist contacted by this website.

While Ms Muigai informed us about how much money the Board had disbursed out of the current allocation, she did not reply to questions about specific timelines the money should take before reaching student accounts. Aware how inefficient HELB had become, many universities no longer honour the Board's commitments to provide funds to students for loans already approved - which for long allowed students to sit for exams even where their funds had not reached their bank accounts.

As the universities face financial challenges, they require students to pay all fees before registering for courses, attending lectures or taking up hostel rooms. However, they can be lenient and wait for the students during examinations. “There is a time when HELB’s letter was a bank statement, not anymore,” said an administrator at the University of Nairobi.

A source familiar with HELB operations informed this website that the problem of students being unable to access funds that have been remitted to their banks has become endemic in recent years. “Previously, many people who interacted with HELB knew of a senior official at the board who demanded bribes before he could approve a contract. But even him, who was reputed as the most corrupt official HELB had had, never interfered with student disbursements.”

Another source suggested that HELB had introduced of a new mandate over financial controls. This allows the finance bosses to control the movement of cash at the commercial banks, whereby a batch can be approved for payment and delay only because one officer has not appended his signature to it. “It could very much be the case that HELB money already out of its accounts is earning interest in some account,” the source said.

When the Kenya Free Press put the question of how long the disbursement should take to Ms Muigai, she did not respond. Most of the affected students live in shacks and can afford meals without the financial support that HELB provides.

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