An MP is pushing for waiver of interest charged on loans to unemployed graduates by the Higher Education Loans Board.

Nominated MP Gideon Keter is proposing to amend the Higher Education Loans Board Act, 1995 to zero rate interest on loans advanced to all youths, women and persons with disability who are jobless.

The waiver, he said, should apply until the beneficiaries secure their first employment upon completion of studies.

The Higher Education Loans Board (Amendment) Bill, 2018 further seeks to half the interest charged on employed graduates to reduce the burden on struggling young graduates.

 Currently, the government subsidises the cost of interest charged on students loan at four per cent per annum for undergraduates.

The board gives a one year grace period to the students after graduation before commencement of payment and any defaulter is slapped with Sh5,000 penalty each month.

This means that a student who received Sh200,000 Helb loan and remains out of employment for five years will be required to pay back Sh 522,090.

“It is noted, that among young Kenyans who join employment every year, only one in five get formal jobs, the rest join the informal sector or engage in occupations that do not earn them a wage. Majority of the beneficiaries stay without jobs for more than two to three years, ” he said.

“This makes them unable to start their monthly payments. The situation is even worsened by the monthly penalty of Sh 5000 that Helb charges upon expiry of the grace period.”

Government records show as of last year Sh9.6 billion was still in the hands on 85,0000 defaulters.