HELB Directs Private Companies to Deduct Loan Repayments

The Higher Education Loans Board (HELB) — Kenya’s statutory body responsible for financing higher education — has recently taken a decisive step to improve the repayment of student loans by instructing private sector employers to deduct HELB loan repayments directly from employees’ salaries. This new approach is part of the Board’s effort to reduce defaults and ensure that the revolving fund sustains opportunities for future students.

This blog breaks down what the directive means, why HELB is enforcing it, the legal and practical implications for employers and employees, and how borrowers can respond.

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1. What Is the New HELB Directive?

In December 2025, HELB formally instructed private sector employers to begin mandatory deductions from the salaries of staff members who have outstanding HELB loans and have defaulted on repayments. The instruction was communicated through an official memo that asked employers to implement the deductions starting December 2025, in accordance with the HELB Act of 1995.

The directive also states that employers should:

• Deduct the repayment amounts from employees’ pay.
• Make payments to HELB by the 15th day of the following month.
• Upload a completed remittance form to the official HELB employer portal.

This move marks a shift in enforcement for the private sector, where previously deductions were mostly voluntary or dependent on individual arrangements.

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2. Why Is HELB Introducing Mandatory Deductions?

The move comes amid concerns about rising levels of loan default among HELB beneficiaries. According to the Board’s CEO Geoffrey Monari, a significant portion — nearly one-third — of the HELB loan book was at risk due to non-repayment. The Board views employer-based deductions as a more reliable way to ensure consistent repayments and safeguard the sustainability of the student loan fund.

Under the existing HELB Act, employers already have legal responsibilities related to loan deductions:

• On hiring anyone who is a HELB loanee, employers are legally required to notify HELB within three months.
• Once notified, employers are expected to deduct the specified repayment amounts from the employee’s wages or remuneration.
• The deducted amounts should be remitted to HELB within a set period — typically within 15 days after the end of each month.

By formalizing these deductions for defaulters in the private sector, HELB aims to reduce outstanding arrears and improve the flow of funds back into the loan system.

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3. How Does Salary Deduction Work?

In practice, the HELB employer deduction process works like this:

1. Employer Disclosure
   When employers hire a staff member, they must disclose whether the new employee is a HELB loan beneficiary using the HELB employer portal. This allows HELB to provide relevant loan information, including the outstanding balance and the monthly deduction rate.
2. Monthly Deduction
   HELB provides a deduction schedule (also called a billing schedule) showing how much to deduct based on the employee’s salary. Employers then deduct this amount each pay period.
3. Remittance to HELB
   Employers must remit funds to HELB by the 15th of the month after deduction. Late remittance can attract penalties (typically around 5% per month of the unpaid amount).
4. Reporting and Compliance
   Employers must upload remittance lists and reports via the HELB employers’ portal to ensure that the payment and its allocation to the borrower’s account are recorded accurately.

Failure to carry out any of these steps — disclose, deduct, and remit — can result in fines or legal action against the employer under the HELB Act.

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4. Legal Obligations and Penalties

While HELB’s directive highlights loan recovery, the legal framework supporting employer deductions is already in place under the HELB Act, Cap 213A:

• Employers must notify HELB when they hire someone who has an outstanding loan. Failing to do so without reasonable excuse is an offence.
• Employers must deduct and remit payments and can face financial penalties — usually 5% per month on amounts not remitted on time.
• The Act further provides that employers who fail to comply can face fines or other legal consequences.

These legal provisions reinforce HELB’s authority to involve employers in helping manage student loan repayments.

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5. What This Means for Employees

For HELB loan beneficiaries working in the private sector, this directive has several implications:

Repayments Are Easier — Automatic salary deductions mean you don’t need to remember or manually pay your instalments.
Better Credit Standing — Regular deductions can reduce defaults and help your compliance record.
Less Chance of Penalty — Being deducted through an employer reduces the likelihood of incurring additional fines for missed payments.

However, there are also concerns:

Reduced Take-Home Pay – Monthly deductions mean a portion of income is retained before you see your salary.

Employment Records – Employers will have access to your loan repayment status, though queries and disputes should still be handled directly with HELB, not the employer.

If you believe deductions are incorrect, it’s important to contact HELB directly to resolve disputes. Your employer typically must continue deductions until HELB advises otherwise.

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6. What This Means for Employers

Employers in Kenya’s private sector now play a more active role in student loan recovery:

Obligation to Notify HELB
Employers must check the HELB portal when hiring new staff to see if any employee has an outstanding loan.

Set Up Payroll for Deductions
HR or payroll departments must integrate the HELB deduction amounts accurately into the payroll system.

Remit on Time
Payments must be remitted monthly, and employers must maintain reporting compliance. Penalties can apply for delays.

Maintain Records
Proper record-keeping and submission via the HELB portal are vital to avoid fines or legal liability.

Employers who fail to comply risk penalties under the HELB Act, including fines for delayed remittance or failure to disclose new loanees.

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7. How Borrowers Can Manage This Change

If you are a HELB loan beneficiary working in the private sector:

Check Your Loan Status — Verify your outstanding balance and repayment schedule on the HELB portal.
Monitor Payslips — Ensure deductions are reflected accurately each month.

Communicate with HELB — For disputes or clarification, contact HELB directly — don’t rely solely on your employer.
Plan Your Finances — Be prepared for lower take-home pay due to regular deductions.
Explore Options — If you can afford to pay lump sums or negotiate repayment plans, talk to HELB about alternatives that may reduce overall costs.

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8. Conclusion

The directive by HELB to involve private sector employers in loan deductions marks a significant development in Kenya’s higher education financing landscape. By leveraging employer payroll systems, HELB aims to reduce defaults, improve compliance, and ensure that the funds meant to support students continue to finance future generations.

While this places new responsibilities on both employees and employers, it also provides a structured and reliable method for loan repayment that can benefit the broader education ecosystem in Kenya. As the policy rolls out, both borrowers and employers should take steps to understand their roles and comply with HELB’s requirements.

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