HELB FINANCIAL LITERACY GUIDE

Q. What is a loan?

Ans. A loan is a sum of money borrowed to be
repaid with interests as per terms and conditions.

Q. Who qualifies to apply for a HELB loan?

Ans.One can access HELB loan for studies as a
government sponsored or privately sponsored student in a recognized
institution of Higher Learning. A student is eligible for HELB loan at
any stage of their academic program.

Q. I am below 18 years, Can I access HELB Loan

Ans. HELB loan is a legally binding agreement
between HELB and the applicant therefore until you attain the age of 18
years you cannot apply for the loan. Please note, you cannot use
another person’s National ID to apply for the loan because it
is illegal and a criminal offense.

Q. How do I get the HELB loan?

Ans. If in need of the loan, you MUST apply
and submit a loan application every year for the course duration
regardless of whether the previous application was successful or not..

Q. I am unsatisfied with my loan award?

Ans.You may also appeal/ request for review of
your loan award if you were not satisfied with previous award. This
includes unsuccessful applications.

Q. Must I apply for HELB loan

Ans. It is not mandatory for one to apply for
the HELB loan. Only apply for the loan if you need financial assistance
during your studies.

Q. How much is charged as loan Interest?

Ans. HELB offers Undergraduate direct entry,
TVET and Afya Elimu loans which are repayable at an interest rate of 4%
p.a.

B. LOAN REPAYMENT

Q. When is the loan due for repayment?

Ans. The loan shall be due for repayment one
year after completion of the course studied or within such period as
the board may decide to recall the loan. When the loan falls due for
repayment, obligation to repay shall not be extinguished or suspended
by the economic status or condition of the loanee. Loan repayment can
be made directly by the loanee.

Jielimishe Loan repayments fall due one month (30 days) after
disbursement.

Q. Does HELB notify me upon completion of loan?

Ans. Upon completion of loan repayment, a
clearance certificate is issued.

Q. What if I need a certificate and haven’t
cleared the loan?

Ans. A compliance certificate is
issued to beneficiaries who have fulfilled their obligation towards the
loan as provided by law. This can be accessed on www.helb.co.ke

Q. A loaneee has the following obligations;

Ans. within a year of completion of his/her
studies or within such period as the Board decides to recall its loan
whichever is the earlier the loanee should:
(a) inform the Board of his/her current contact contacts
(b) begin repayment of his/her loan together with any interest and fees
accrued thereon;
(c) if he/she is in formal employment, to authorize his/her employer to
deduct the loan repayment and to remit it to the Board in such a manner
as the Board may direct.

Q. What are benefits of prompt repayment

Ans. You will build a good credit history for
yourself. This will improve your credit score and positively impact
your future borrowing power. You will also be eligible for a
Post-Graduate loan from HELB if you are servicing your under-graduate
loan. By paying promptly, you avoid attracting penalties and paying
much more in the end.

Q. What are repercussions of defaulting on my HELB loan?

Ans.

• You will be charged penalties at the rate of Kshs.
  5,000 for every month defaulted
• You will additionally be listed as a defaulter with
  the Credit Reference Bureau (CRB). You will therefore not access loan
  facilities with any financial institution in Kenya.
• Additionally, you will not access employment
  opportunities in the government and major private and publicly listed
  companies
• Your guarantors will also be pursued and forced to
  service the HELB Loan

Q. What is Credit Reference Bureau?

Ans. A credit reference bureau is a company
licensed by central bank of Kenya to collect, store and collate credit
information on individuals and companies from different sources and
provide the information in form of a credit report upon the request of
a lender. The lenders then advance or decline loan applications based
on the reports.

• CRB listing is done for everyone who has accessed a
  loan facility
• Listing can be both positive and negative
• Reports from CRBs are also required by employers when
  vetting the integrity of prospective job applicants.

WE THOUGHT YOU SHOULD KNOW………

DEBT

It is an amount of money borrowed by one party-a debtor, from another-a
creditor. For an individual, they may borrow to finance education, a
car, a home; for a business, they may seek to borrow funds to expand
their operations.

GOOD DEBT

Good debt is an investment that will grow in value or
generate long-term income. A perfect example of a good debt is taking
out student loans to pay for a college education. It’s an
investment in your future!

BAD DEBT

Bad debt is debt incurred when purchasing items that quickly lose their
value, do not generate long-term income and typically carry high
interest rates.

PRINCIPAL

It is the amount of money borrowed from a lender.

INTEREST

It is a fee charged on the amount borrowed. The fee is expressed as an
annual percentage of the principal. The fee(interest) can be fixed or
variable.

GUARANTORS

A guarantor is someone who “guarantees” someone
else’s loan or credit contract i.e. promises to assist track /put
pressure on the loanee or repay a debt if the borrower can’t or won’t.
This is usually because the lender is concerned about the person’s
ability to keep up their loan repayments.

Q. Who can be a guarantor?

Ans. Almost anyone can be a guarantor. To be a
guarantor, one need to be over 18 years old, with a good credit history
and financial stability

Q. Can I withdraw my guarantee?

Ans. Unfortunately, if you have signed the
loan agreement and the loan has been successfully paid out, you cannot
stop being someone’s guarantor. Nonetheless, the Board can consider
accepting change of guarantor if the loanee and the guarantor bring
forth a replacement guarantor usually within less than one year after
the initial loan has been issued.

IDENTITY THEFT

One of the most prevalent forms of consumer fraud is identity theft.
This occurs when personal information is used by an individual who is
not authorized to possess or use the information. Examples include the
illegal acquisition of a credit card or bank account number.

Q. WHAT IS INSURANCE?

Ans. Insurance is paying in advance for
protection from unexpected or accidental loss or damage of an asset or
a death or injury of a person. It is basically setting up a contract to
help reduce the financial impact and to protect oneself from some type
of loss.

Section 6 of the HELB Act states that the Board can take out insurance
cover for risky loans such as death, incapacity or inability to pay, as
the Board deems fit.
Starting from the 2019/2020 academic year first time undergraduate and
TVET loan beneficiaries are eligible for enrolment into the Student
Loans Self Protection scheme described herein as follows;

Q. What is a Student Loans Self Protection Scheme
(SLSPS)?

Ans.
This is a protection plan that covers the portion of an outstanding
loan balance for a performing loan in the case of a mature loan and the
full loan balance in the case of a non-mature loan in the unfortunate
event of death of a loan beneficiary. This works like credit life in
insurance.
Jielimishe loan beneficiaries are covered for the outstanding loan
liability in case of death or permanent and total incapacitation.

CREDIT SCORE

It is a rating computed by credit reference bureaus based on
information available on your credit report. Individuals with good
credit scores have made timely repayments on previous loans and lack
defaults on current outstanding loans.

Q. What is Credit Information Sharing

Ans. It is a process through which lenders
exchange consumer information, specifically related to a
consumer’s borrowing history. This exchange is facilitated
through Credit Reference Bureaus.

Q. Why do we share your Credit Information?

Ans.
Sharing borrowing history of consumers can result in the following:
1) A decrease in bad debts and defaults
2) Reduces over indebtedness
3)Consumers become wise in managing debt because now there are
consequences!
4) More consumers can access affordable credit!
5) Rewards good borrowing behaviour. Consumers with healthy credit
scores access loans with more favourable terms
6) Lending decisions are made faster because more information is
available