The Higher Education Loans Board (Amendment) Bill, 2023

SPECIALISSUE

Kenya Gazette Supplement No.36(National Assembly Bills No.10)

REPUBLICOFKENYA

KENYA GAZETTE SUPPLEMENT

NATIONALASSEMBLYBILLS,2023

| NAIROBI,22nd March,2023 | |-------------------------------------------------------| | CONTENT | | Bill for Introduction into the National Assembly- | | The Higher Education Loans Board(Amendment) Bill,2023 |

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THE HIGHER EDUCATION

LOANS BOARD(AMENDMENT)BILL,2023

A Bill for

AN ACT of Parliament to amend the Higher Education

Loans Board Act.

ENACTED by the Parliament of Kenya,asfollows

• 1.This Act may be cited as the Higher Education
• Loans Board(Amendment) Act,2023.
• 2.Section 2 of the Higher Education Loans Board Act (herein after referred to as the principal Act) is amended by inserting the following new paragraphs in their proper alphabetical sequence-

"disability" includes any physical, sensory, mental,

psychological or other impairment,condition or illness that has,or is perceived by significant sectors of the community to have,a substantial or long-term effect on an individual's ability to carry out ordinary day-to-day activities;

"youth"means a person who-

• (a) has attained the age of eighteen years; but
• (b) has not attained the age of thirty-five years.

3. Section 6 of the principal Act is amended in

• appearing immediately before the word "recovery".

4. Section 15 of the principal Act is amended-

• (a) by inserting the following new subsection immediately after subsection(1)-
• "(lA) Notwithstanding the provisions of subsection (l) (b),no interest shall be charged on the principal amount advanced to the youth and persons with disabilities until they have secured their first employment upon completion of studies".
• (b) in subsection (2) by deleting the words within the stipulated time" appearing immediately after the words "subsection (1)"where they first appear

Short title.

Amendment of section2 of No.3 of1995.

Amendment of section 6of No.3

of1995.

Amendment of section 15 of No. 3of1995.

and substituting therefor the words " upon

• securing employment or within five years after completion of his studies"
• 5.The principal Act is amended by inserting the following new section immediately after section 14-

Interest rate.

• 14(A).The maximum interest rate to be charged by the Board on the principal amount advanced to a loanee shall not be more than three per centper annum.

Insertion of new section in No.3of 1995.

MEMORANDUMOFOBJECTSAND REASONS

The principal object of this Bill is to amend the Higher Education

Loans Board Act,No.3 of 1995 to waive the imposition of interest on the principal amount of a loan advanced to the youth and person with disabilities until such time as they have secured their first employment. Secondly,it sets the percentage of interest that may be charged on the loan advanced at three per cent.It also provides that the penalty charged on defaulting of the loan shall be charged after securing employment or five years after completion of studies. The aim of these proposals is to reduce the financial burden on recent graduates who are expected to pay large sums of money to the Higher Education Loans Board even before securing employment orbecoming financially stable.

Clause 1 of the Bill provides for the short title.

• Clause 2 of the Bill provides for the amendment to section 2 of the Act to insert the definitions of the terms "disability"and "youth"which are used in the proposed amendments.
• Clause 3 of the Bill provides for the amendment of section 6 of the Act to remove the function of setting therate of interest from the Board.
• Clause 4 of the Bill provides for the amendment of section 15 of the Act by inserting a new subsection that provides that interest in the case of the youth and persons with disabilities shall become due upon them securing employment aftercompletion oftheirstudies.
• Clause 5 of the Bill provides for the insertion of a new section that sets the rate of interest charged on the loans at a maximum of three per cent per annum.It also provides that the penalty charged on defaulting of the loan shall be charged after securing employment or five years after completion of studies.

Statement on the delegation of legislative powers and limitation of fundamental rights and freedoms

This Bill does not delegate legislative powers nor does it limit fundamental rights and freedoms.

Statement of how the Bill concerns county governments

The Bill does not concern county governments in terms of Article

109(5) of the Constitution as it does not contain provisions that affect the functions and powers of the county governments as set out in the Fourth Schedule to the Constitution.

Statement as to whether the Bill is a money Bill within the meaning of Article 114 of the Constitution

The enactment of this Bill shall vary the charges of a public fund.

JOYCEKAMENE, Member ofParliament.

Section 2of No.3 of 1995which is intended to be amended-

Interpretation

In this Act,unless the context otherwise requires-

"Board"means the Higher Education Loans Management Board

established by section 3 of this Act;

• "Commission for Higher Education"means the Commission established by section 3 of the Universities Act;

"eligible person" means any person, who being a Kenyan citizen, has attained minimum entry requirements and has been admitted to a recognized institution of higher education to a full time course of at least one year's duration;

"Fund"means the Higher Education Loans Fund established by section ll of this Act;

"Higher education" means any course of education offered by an institution above the standard of Kenya Certificate of Secondary Education or any equivalent certificate approved by the Board;

"Loanee" means any person granted an education loan either under person granted an education loan by the Ministry of Education from 1974

the Higher Education Loans Fund Act (Cap. 213) (now repealed) or any through the National Bank of Kenya or any person granted an education loan by the Ministry of Education through the National Bank of Kenya and the Kenya Commercial Bank from 1989 until commencement of this Act, or any person granted an education loan by the Board under this Act;

"Secretary"means the Secretary to the Board appointed

under section 5 of this Act;

"student" means any Kenyan citizen admitted and pursuing higher education with financial assistance from the Board.

Section 6 of No.3of 1995which is intended to be amended-

• 6.Functions of the Board

The functions of the Board shall be-

• (a) to formulate sound policies for regulating the management of
• the Fund;
• (b) to solicit for funds and other assistance to promote the functions
• of the Board;
• (C) to set the criteria and conditions governing the granting of loans including the rate of interest and recovery of loans;

• (d) to receive any gifts, donations, grants or endowments made to
• the Board,and to make legitimate disbursements therefrom;
• (e) to establish and maintain links with other persons,bodies or organizations within or outside Kenya, as the Board may consider appropriate for the futherance of the purposes for which the Board is established;
• (f to enter into contracts with financial institutions for the purpose of loans disbursement and recovery;
• (g) to grant loans out of the Fund either with or without security,as the Board may deem fit,to any eligible person to enable him,or assist any student,to meet the cost of higher education;
• (h) to determine the maximum number of eligible persons or
• students to be granted loans in any one particular year;
• (i) to invest any surplus funds not currently required for the purpose of the Board in any investment authc rant by law for the
• or realize those investments;
• with the consent of the Minister,to set up and expend such other funds asmay from time to time be required;
• (k) to receive and consider all loan applications from eligible persons or students wishing to be considered for the award of higher education loans,and to approve,withhold or reject such
• requests in accordance with the provisions of this Act;
• D to borrow such monies from such sources and in such amounts as may be approved by the Minister with the concurrence of the Treasury and to secure such loans in such manner as they deem fit;
• (m) to take out insurance cover for risky loans such as death, incapacity or inability to pay,as theBoard deems fit;
• (n) to establish and award bursaries and scholarships which it may consider necessary for the promotion of the objectives and functions of the Board.
• (o)to perform any other functions relating to the granting of
• students'loans in accordance with the provisions of this Act;and
• (p) to perform and exercise all other functions and powers conferred
• on the Board by this Act.

Section15ofNo.3of1995whichisintended tobeamended-

15.Obligations of the Loanees

• (1) A loanee shall be required,subject to and in accordance with this Act or any regulations made thereunder, within one year of completion of his studies or within such a period as the Board decides to recall its loan whichever is the earlier-

2. (a) to inform the Board of his contact address; 3. (b) to begin repayment of his loan together with any interest accrued thereon; 4. (c) if he is in formal employment, to authorize his employer to deduct the loan repayment and to remit it to the Board in such manner as the Board may direct.

• (2) Any loanee who fails or neglects to satisfy the requirements of subsection (l) within the stipulated time shall,in addition to any other action that the Board may take against him,be guilty of an offence and liable to a fine of not less than five thousand shillings in respect of each loan deduction that remains unpaid in accordance with provisions of subsection (l) and such fine shall be payable to the Board.