government against securities such as Land Title Deeds, Insurance policies and Written Guarantees.However by 1974, provision of education in general had expanded dramatically as a result of the heavily subsidized primary and secondary education and the general yearning for education by most Kenyan families. Consequently, the number of students seeking university education had grown to an extent that it was becoming increasingly difficult to adequately finance university education by providing full scholarships and grants by the Government.
The Government therefore introduced the University Students Loans Scheme (USLS), which was managed by the Ministry of Education. Under the scheme, Kenyan students pursuing higher education at Makerere, Nairobi and Dar es Salaam universities received loans to cover their tuition and personal needs, which they would repay on completion of their education. However, the University Students Loans Scheme (USLS) was plagued with a number of problems right on the onset. It lacked the legal basis to recover matured loans from loanees. In addition, the general public and university students wrongly perceived that the loan was a grant from the government, which was not to be repaid.
In order to address this problem, in July 1995 the Government through an act of Parliament established the Higher Education Loans Board to administer the Student Loans Scheme. In addition, the Board is also empowered to recover all outstanding loans given to former university students by the Government of Kenya since 1952 through HELF and to establish a Revolving Fund from which funds can be drawn to lend out to needy Kenyan students pursuing higher education. The establishment of a revolving fund was also expected to ease pressure on the exchequer in financing education, which currently stands at 40% of the annual national budget.
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