The Higher Education Loans Board (HELB) has unveiled stringent new penalties targeting non-compliant employers and loan beneficiaries, in a renewed push to recover over Ksh100 billion in unpaid student loans.
In a directive issued on Friday, March 20, HELB announced that employers who fail to declare employees with outstanding student loans or neglect to remit deductions will now face a fine of Ksh3,000 per employee every month. The penalty will also be backdated to the employee’s date of hire, significantly increasing the financial burden on companies that have failed to comply.
The board said the move is part of a broader enforcement strategy following widespread non-adherence to a 2025 directive that required employers to support loan recovery efforts.
At the same time, loan beneficiaries who have defaulted on repayment will be required to pay a monthly penalty of Ksh5,000. The sanctions are expected to affect thousands of graduates who have not been servicing their loans.
According to HELB, more than 20,000 employers and approximately 360,000 loan beneficiaries are currently in default, highlighting the scale of the challenge facing the institution. The board noted that many employers have failed to submit employee records, deduct repayments, or remit the funds as required.
Under existing regulations, employers are mandated to deduct up to 15 per cent of the salaries of employees who benefited from HELB loans and remit the funds directly to the board. However, compliance levels have remained low, undermining the sustainability of the student loan programme.
HELB has made it clear that it will not write off unpaid loans, emphasizing the importance of recovering funds to support future students seeking higher education financing. The board insists that loan repayment is a legal and civic obligation that must be honoured.
To ease compliance, HELB is encouraging employers to use its online Employer Portal. Through the platform, organisations can register, declare employees with loans, access billing schedules, process deductions, and remit payments through approved channels.
With the new measures now in force, both employers and beneficiaries are under increased scrutiny. Stakeholders are being urged to comply promptly to avoid accumulating penalties that could escalate over time.
The crackdown signals a tougher stance by HELB as it seeks to restore financial discipline and ensure the sustainability of its revolving fund.
For many employers and graduates, the message is clear: comply with repayment rules or face mounting financial consequences.
