The Act is looking at removing interest on students loans offered to women, youth and person with disabilities.
The Higher Education Loans Board (Helb) interest is looking at a possibility of being slashed to half, to enable students to pay the loans.
The interest cap at two percent will effectively leave Helb with a financing a hole of Sh543.5 million according to analysis done by Parliamentary Budget Office (PBO).
“The aim of these proposals is to reduce the financial burden on recent graduates who are to pay large sums to the Higher Education Loans Board even before securing employment or becoming financially stable,” said nominated MP Gideon Keter who has sponsored the Bill.
The PBO estimates the number of students advanced loans every financial year is 50,000 with each getting an average of Sh200,000 by the time they complete studies.
The PBO reckons the total interest reduction based on the proposed interest rate of two percent, will be Sh543.5 million.
“The interest income may further reduced depending on the number of youth, women and disabled persons who benefit from Helb and do not secure employment,” said the PBO.
The student financier gives loan beneficiaries a grace period of one year from the date of school completion, after which they are expected to start payments.
Helb relies on loan recoveries, government capitation and grants from development partners for funding.
The student financier has suffered incessant funding shortfalls due to beneficiaries defaulting on repayment in what has worsened the plight of learners from poor backgrounds.
Helb is reeling from Sh6.6billion non-performing loans advanced to 64,000 former university students, an indication of their inability to repay.
Currently, Helb has 300,000 students studying in various institutions who have been allocated Sh24 billion as loans.