HELB’s Next Move: KRA to Help Hunt Down Student Loan Defaulters in the Informal Sector.
The Higher Education Loans Board (HELB) is set to partner with the Kenya Revenue Authority (KRA) to enhance the recovery of outstanding student loans from beneficiaries operating within Kenya’s informal sector, as the board intensifies efforts to address persistent loan defaults.
Speaking during a KTN interview on July 8, HELB Chairperson Ekwee Ethuro stated that the informal sector has remained one of the institution’s biggest challenges in loan recovery because borrowers outside formal employment are not subjected to automatic salary deductions, unlike those employed in the formal sector.
Ethuro said the board is exploring strategic partnerships to improve loan recovery, identifying collaboration with the Kenya Revenue Authority as a viable approach due to the authority’s extensive data systems and nationwide reach.
“That’s why we are exploring the partnerships, and the KRA partnership is a very viable one,” Ethuro stated.
“They have better systems, a greater outreach, and if you buy something, KRA will be knocking on your door,” he added.
The proposed collaboration targets beneficiaries who completed their studies but did not secure formal employment and instead earn their livelihoods through businesses in the jua kali sector, gig economy, self-employment, or other informal economic activities that fall outside conventional payroll-based loan recovery mechanisms.
According to HELB, more than 380,000 loan beneficiaries have defaulted on repayment obligations. Of these, over 124,000 have been classified as chronic defaulters, including more than 83,000 individuals who have not serviced their loans for over ten years.
The board noted that these long-term defaulters have been listed with Credit Reference Bureaus (CRBs), limiting their access to various banking and financial services. HELB attributed the high default rate primarily to persistent youth unemployment.
Ethuro stated that the Kenya Revenue Authority’s technology-driven enforcement systems could significantly improve the board’s ability to identify borrowers within the informal economy. He noted that KRA relies on automated data-matching systems, digital integrations, and financial intelligence rather than conventional tax audits to monitor economic activity.
The authority’s enforcement framework includes the use of mobile money transaction monitoring, till number tracking, data analytics, lifestyle assessments, asset audits, and the identification of undisclosed business turnover, enabling it to detect financial activities that may otherwise remain outside traditional payroll records.
Ethuro said KRA’s extensive data infrastructure allows the authority to identify financial footprints that the Higher Education Loans Board cannot independently access, including significant purchases and other taxable economic activities.
The HELB Chairperson emphasized that the proposed partnership is intended to strengthen loan recovery mechanisms rather than criminalize borrowers.
According to Ethuro, the initiative is designed to facilitate repayment through institutional collaboration instead of intimidation or imprisonment of loan beneficiaries who have defaulted.
The latest proposal follows existing collaboration between the Higher Education Loans Board and the Kenya Revenue Authority targeting loan recovery within the formal employment sector.
Under the current enforcement framework, employers are required to submit employee details, commence statutory deductions from employees with outstanding HELB loans, and remit the recovered amounts to the board by the 15th day of every month.
In March 2026, the Higher Education Loans Board strengthened enforcement measures against non-compliant employers. Organizations that fail to declare employees with outstanding HELB loans or fail to remit the required deductions are subject to a monthly penalty of KSh3,000 for each affected employee, with the penalties backdated to the employee’s date of employment.
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Ethuro disclosed that the outstanding loan portfolio owed by defaulting beneficiaries currently stands at approximately KSh20 billion.
He added that the board has recorded improvements in loan recoveries following the implementation of enhanced enforcement measures, including collaboration with employers and the integration of financial technology solutions into its loan recovery systems.
HELB’s Next Move: KRA to Help Hunt Down Student Loan Defaulters in the Informal Sector.
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