By Cynthia Kimola
If you studied in a university in Kenya, then you know how HELB (Higher Education Loans Board) beneficiaries somehow appeared to be enjoying the good life whenever their money checked into their bank accounts. After paying for their tuition fees and accommodation, some of them would use their balance to buy the latest gadgets or splurge on the trendiest clothes. The rest of us who relied on the little pocket money our parents would give us, learnt to survive on legumes and Sukuma wiki the whole semester.
Fast forward a few years. Upon graduating, some HELB beneficiaries were shocked to discover that the loans had to be repaid, and with interest. A majority of those who were lucky enough to land a job straight after campus didn’t put repaying the loan as a top priority often stating that they needed to “enjoy” their hard earned money first. Others said that they were not earning enough to live on and pay back the loan at the same time. This led to a lot of loans in default and the Higher Education Loans Board had to mitigate against this by working hand in hand with employers who assisted them to ensure that all employees who had a HELB loan were repaying it through the salary check off system. Some employers even asked for a HELB clearance certificate to ascertain you have cleared the loans and if not, they did mandatory deductions.
What can we learn from these experiences? Loans don’t miraculously disappear. They have to be repaid so that other students can be facilitated to attain higher education. So even though your first salary is not much, you still have to make minimal payments to offset the loan to avoid being penalized for defaulting.
Financial experts recommend that to clear your student loan faster, you have to adopt some lifestyle changes that will free up some money or help you make extra cash that you can channel towards repaying your loan. Some of them include:
Budgeting
Budgeting will show you exactly where your money is going and the unnecessary expenses you need to cut back on. When done correctly it can help you to spot “extra” cash which you can use to throw at your student loans each month to start clearing that debt in no time. This will also be more effective if you learn to live within your means, as it will help you save more money that can be used towards loan repayment.
Pay more than the required minimum
Making larger payments helps you finish the loan faster, as you reduce the principal and eventually pay less interest. If you are required to pay off at least Sh5000 a month towards your HELB loan, try to pay more than that if you can, say Sh7000 or even Sh10000. Since you already made a budget and cut out unnecessary spending, the “extra cash” you have freed up should be directed toward paying back your student loan.
Make Extra Income
It’s not advisable to drag your student loan repayments over the next 10 years. You will finish repaying the loan faster by getting additional sources of income like a second job, freelancing, consulting, selling things etc. Use a big chunk of your side-hustle money to repay your loan, so that you can start enjoying and investing your money, loan free.
Take advantage of waivers
The Higher Education Loans Board in Kenya periodically gives 100% waivers to encourage graduates who have HELB loans to repay them without attracting penalties. The grace period can be anywhere from a month to three months. You can take advantage of this by making lump sum payments or even paying off most of what you owe to reduce the principal.
Student loans enabled most of us to access higher education which helped us to shape our future. However, the loans need to be repaid so that they can also benefit other students. Student loans or any loan for that matter holds you and your money hostage until you finish repaying it. When you clear debt faster you are able to enjoy financial freedom and dictate how and when to spend your money, knowing that you don’t owe anyone money.