The Higher Education Loans Board (HELB) has announced plans to access data from the Kenya Revenue Authority (KRA) and the National Transport and Safety Authority (NTSA) to track student loan defaulters. This move comes as the agency faces mounting pressure from growing defaults and an increasingly strained funding situation that left 163,488 eligible students without loans in the 2024/25 financial year.
The Funding Crisis
HELB received 713,173 loan applications for the 2024/25 academic year but could only fund 322,338 students due to a KES 13.7 billion funding shortfall. Despite recovering KES 5.21 billion in loan repayments, an 11% year-on-year improvement, the agency projects an even deeper KES 36.1 billion deficit for the current financial year.
The funding crisis has been exacerbated by Kenya’s recent restructuring of higher education financing. The government merged the University Fund with HELB as part of broader state corporation reforms aimed at addressing fiscal challenges. This merger was designed to streamline operations and reduce redundancies, but it has coincided with unprecedented demand for student loans.
Tracking Defaulters Through Car Ownership
HELB’s controversial proposal to access KRA and NTSA databases stems from observations that some loan beneficiaries have purchased vehicles while failing to repay their educational loans.The agency argues that cross-referencing tax records and vehicle registrations will help identify defaulters who have the financial means to repay but are choosing not to.
The proposed data-sharing arrangement would allow HELB to monitor income declarations submitted to KRA and vehicle purchases registered with NTSA. This information would theoretically enable the agency to pursue defaulters who demonstrate financial capacity through major purchases like automobiles.
Privacy Concerns and Data Protection
The proposal raises significant privacy and data protection concerns. Kenya’s Data Protection Act, enacted in 2019, requires strict adherence to data protection principles when processing personal information. Recent enforcement actions by the Office of the Data Protection Commissioner, including penalties totaling KES 9.375 million against various organizations for data misuse, highlight the regulatory environment’s increasing scrutiny of data handling practices.
The proposed data sharing between HELB, KRA, and NTSA would involve processing sensitive financial and personal information across multiple government agencies. This raises questions about consent, data minimization, and the proportionality of such surveillance measures. Kenya’s data protection framework emphasizes that personal data should only be collected and processed for specific, legitimate purposes with appropriate safeguards.
The Car Ownership Argument: A Complex Issue
While HELB’s focus on car ownership as an indicator of financial capacity may seem straightforward, the reality is more nuanced. Several factors complicate this approach:
Family and Business Considerations: Many young professionals may have access to family vehicles or use cars for business purposes that generate income to support loan repayments. Vehicle ownership doesn’t necessarily indicate personal wealth or the ability to immediately repay student loans.
Asset Financing: Most vehicle purchases involve financing arrangements where the buyer makes monthly payments over several years. A person may own a car while still having limited disposable income for loan repayments.
Income Generation: For many graduates, particularly those in business or service sectors, a vehicle may be essential for income generation. Forcing immediate loan repayment could undermine their ability to earn money needed for sustainable repayment.
Co-ownership and Inheritance: Vehicles may be co-owned with family members, inherited, or acquired through other arrangements that don’t reflect the graduate’s personal financial situation.
Broader Implications
The HELB funding crisis reflects deeper challenges in Kenya’s higher education financing system. The agency’s struggles come at a time when the country’s new university funding model has faced significant criticism and legal challenges. The High Court declared the Variable Scholarship and Loan Funding model unconstitutional in December 2024, citing discrimination and lack of public participation.
The integration of different government databases for loan tracking represents a significant step toward digital surveillance of citizens’ financial activities. While the intent may be to improve loan recovery rates, it raises questions about the balance between public accountability and individual privacy rights.
Moving Forward
As HELB navigates its funding challenges, the agency must balance the need for improved loan recovery with respect for borrowers’ privacy rights and the complexities of individual financial situations. The proposed data-sharing arrangement with KRA and NTSA may provide some insights into defaulter behavior, but it should be implemented with appropriate safeguards and consideration of the broader privacy implications.
The crisis also highlights the need for more sustainable funding models for higher education in Kenya. With growing enrollment pressure and limited government resources, innovative financing solutions that don’t rely solely on debt-based funding may be necessary to ensure continued access to higher education for Kenyan students.
Discover more from Techish Kenya
Subscribe to get the latest posts sent to your email.
