More than 75,000 university first year students have failed to get State loans issued by the Higher Education Loans Board (Helb).
Helb said the freshmen, who joined public universities in September, will have to wait till the Treasury offers it Sh3 billion for initial disbursement.
The majority of loan applicants come from poor households and require financial support from Helb to pay for their tuition and upkeep.
Most higher learning Institutions require full payment of a semester’s fees to admit students and delay in disbursement, therefore, risks forcing some freshmen to postpone their studies.
Helb executives on Thursday told Parliament that inadequate allocation and delayed release of cash by the Treasury had triggered the cash crunch amid rising defaults from former university students in the wake of the Covid-19 pandemic that triggered layoffs, business closures and a freeze in hiring.
“Right now we have 75,000 first-year students that are yet to be funded and we require Sh3 billion to process their applications,” Helb chief finance officer Mary Wachira told the National Assembly Committee on Education during the review of the national budget.
The delayed disbursement means that the first-year students will have to find alternative means of paying for their tuition, accommodation and upkeep as they await government funding.
The agency funds needy students to the tune of between Sh35,000 and Sh60,000 per year, based on their economic background.
Of the total loan disbursed, Sh8,000 is sent directly to the university as tuition fees and the balance to the beneficiary’s bank account in two equal tranches covering the first and second semesters.
But the average allocation has dropped from Sh43,000 to the current Sh37,000.
The cash crunch at the Treasury comes in a period when revenue collection has been hit by the effects of the pandemic amid increased budgetary requirements in an election year.
Loan defaulters have weakened Helb’s ability to support university and technical college students, prompting allocation cuts and increased reliance on the Treasury.
More than 100,000 former university students defaulted on their Helb loans at the peak of the Covid-19 pandemic