Amina recently announced that the ministry of education will enlist the help of the police to track down over 74000 HELB defaulters who owe the government a whooping 7.2 billion. You could feel the anger everywhere on the streets of KoT. And I totally get why. 1 in every 4 Kenyans is unemployed meaning in a graduating class of 100, 25 are unemployed.
The numbers are even much worse on the ground now that I am part of that statistic. Moreover, even those employed are in jobs that merely sustain them. After rent, food and lunch nothing is left over for savings and investments. Which begs the question of how such a graduate is meant to repay a HELB loan of over $148?
Facts about the HELB loan
Applying for the HELB loan is quite a lengthy process that involves your chief and religious minister. However, that doesn’t compare to the facts in small print that you missed. If you are considering repaying your student loan (or not) below are things you should know;
- Helb attracts a penalty of $50 yearly if you do not start paying the loan
- The monthly deduction is $50 a month
- If you default on that monthly deduction, say by losing your job, the penalty is $50 per month. Read the in duplum rule.
- HELB attracts an interest of 4% per annum
- A grace period of 1 fiscal year is awarded before your HELB loan can attract interest. If you take a gap year maybe by deferring, HELB will still require you pay your loan within the time. Class of 2018 will still pay their loan in 2019.
- Failure to repay your loan can lead to a lowered credit score and a Credit Reference Bureau (CRB) listing.
This thread on Twitter by @Tugen Girl has more comprehensive facts about the laws governing HELB. It’s worth a read .You should know what you signed up for. All these facts are usually in the application procedure/ contract. But as far as university students are concerned HELB is the period in a semester marked by orgies and road trips and missed classes.
Why I Applied
I was 17 the year I enrolled, so I wasn’t eligible for HELB. The process was tiring so I decided to skip it altogether. However, after my second year, I needed to move out of school hostels and I really needed that extra cash, and it was a pretty straightforward process. I downloaded the application, filled it, sent it home for my guarantors to sign and mailed it via the Dean of Schools Office.
Before you ask, yes I used the money wisely, at least three-quarters of it. All my subsequent applications were denied, but I was freelancing at the time so I really didn’t need to finance my lifestyle with a loan.
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I graduated in 2018 and was lucky to have a job a month before my graduation. It’s a call center position that is on the opposite spectrum of my Economics degree but I was glad to be out of the house. I don’t really recall how I spent my first paycheck. I meant to buy shares but I was not in the position to critically analyze the market. Also, it’s not that big a pay.
P.S- I moved back home so I basically have no rent or food expenses.
So I vowed to spend my second paycheck wisely and having seen the horror that is CRB, I decided to pay my HELB loan. Let me tell you, it’s not easy saving up for loan repayment but I tried. From my calculations, I owed HELB about $350. In my mind, paying it before the one fiscal year grace period meant I would avoid penalties and accrued interest.
The facts were not that clear but I saved up October and November’s salaries. It still wasn’t enough, especially because these were bad months at my workplace. So I decided to visit their offices. They are located on the ground floor of Anniversary towers. I know because I tried to appeal for a subsequent in my third year.
Negotiate a repayment plan
Nonetheless, I was not prepared for the queues. At around 1000hrs on a drizzling lazy weather morning in January, I arrived at their offices. I figured it was a consultation exercise so I’d be out by 12 and still made it in time for my shift at 1300hrs. Was with a friend, and we decided that would not be the day.
After a week, I came back earlier, was there at 0830hrs and there were only 2 tellers servicing the whole floor. Is it just me who seems to visit offices when everyone is away at lunch or leave? Please, it’s 2019, if you have hacked the best time to visit banks and government offices kindly leave a comment. I will be entirely grateful.
They had to move some of us to the 13th floor. The service was much quicker, and the air felt cooler, more organized like more important things happened here.
I got served by this amazing older woman who was helpful and nice. Okay, I hadn’t dressed like someone who was there to start repaying a student loan, casual work clothes. She even asked what job I have just to be nice. I needed my HELB statement. How much I owed them, payment details and the whole clearance process.
Apparently, my HELB loan had a penalty of $100 for the two years since their first and only remittance in 2015. Plus the accrued interest the total was $433. I was able to negotiate for a two-time payment schedule that worked for me.
Pay a lump sum amount
A lump sum sounds like something you would never consider. Naturally, you are more inclined to go with monthly deductions. Here’s why I disagree;
- They give you a discount
- You avoid interest
- If you pay during the waiver period, all the penalties can be scraped off .
- They need you more, you have the upper hand
- No chance of a penalty if you clearly articulate your payment plan
- You get to deal with one agent. No chance of confusion, overpayment or lost sums.
My new bill was around $395 once they gave me the 40% discount on the penalties. Right there I knew I couldn’t pay it in one payment. So I asked if I could do 2, and they said yes. As I said, if you pay a huge sum you have an upper hand and can negotiate better terms.
About that time I had like $100 in savings and I was stuck between paying it and renewing my blog’s hosting. Among other alternatives, I went with SiteGround’s GrowBig plan which was like $71 (I’ll explain why this was the best blog hosting option).
Subsidize your savings with a loan
Once I got my December salary (5th Jan), I decided to just do both, so I made my first deposit of $290 and renewed my blog hosting. And I went broke. When I said I was broke in January I really meant it. I couldn’t even afford to take me out.
After tithing and paying off HELB and migrating my site I had nothing but fare. Hello packed lunches to work. I took out a loan with mshwari around $20 to fund my broke self for the remaining month. Immediately I got January’s salary, I paid the remaining $100 and my mshwari loan and now am free.
Fact- savings will never be enough especially if you owe more than I did. Try saving up at least three quarters and top up the remaining amount with a loan. If you need around $160, save around $100 and see if you can top it up from low-interest loans with a flexible payment plan. Friends and Mshwari are a good option.
My credit score is 718. A boring report since I have no TALA, Branch, Mshwari or Okash.
My HELB repayment Story
While editing, I realized the story had a lot of gaps. So I included a list of things that may not be clear from the title:
- I only got a student loan in my second year, and for that year only.
- There was an issue with my subsequent application. Something about my parents defaulting theirs in the ’90s. P.S my mum paid hers off in 2018.
- If you got the HELB loan for the 4 years, your loan is about $148.
- Those that got the disabilities or orphan package have more to pay, about $208.
- Class of 2018, your clock is ticking, the penalty begins this year.
- I was lucky to have such a small loan, a job, and no responsibilities at the time I write this.
- If it is not enough, then take out a more flexible loan to pay HELB off. I advocate for mshwari. Save three quarters, loan the rest.
- Do not stress. If you have responsibilities now, you can always pay it later. Just DO NOT start paying and then default along the way.
Yes, so I paid off my HELB loan on a retainer of $130 plus commission and in 2 months.
Have you paid your HELB loan? Or any student loan? What was your experience? Do you plan to repay it? Is this article helpful? Also, try checking if they have discounts going on. The Kenyan government often advertises various offers.