The Higher Education Loans Board (Helb) has opposed proposals that beneficiaries repay their dues after landing jobs, saying this would prevent it from pursuing those in self-employment.
Igembe South MP Paul Mwirigi is pushing for amendments to the Helb Act to spare beneficiaries fines before they get jobs.
Helb chief executive Charles Ringera told Parliament that the agency lacks a mechanism of determining those who have secured employment and relies purely on goodwill.
“The proposed amendment is objectionable as it will no doubt weaken Helb’s loan recovery mechanisms,” he said.
Helb is supposed to be a revolving fund where beneficiaries who have completed their studies pay back the loans to support a fresh group of students.
Currently, graduates are required to start repaying the student loans within a year after graduation in what has left thousands of beneficiaries in default and at risk of being blacklisted with the credit reference bureaus.
Defaulters are charged Sh5,000 a month in penalties within a year of completing a course.
The Igembe South MP argues that a relatively small percentage of graduates secure employment within one year after graduation and that the change in the law would cushion them from the penalties.
The Helb said in such a case, the loanees would no longer feel pressured to complete their studies and enter gainful employment so they can start servicing their loans.
The assertions come at a time the University of Nairobi launches a crackdown to weed out learners who have overstayed at the institution beyond the required time.