Monday, June 3, 2013

Education is Expensive...for a couple of reasons!

Last week I shared something about the importance of making great connections .
Today's post is about student loans. So what's a student loan?
Well, a student loan is set up to enable students pay for tuition, books and living expenses as they study. It's considered a much welcome help given that tuition is very expensive in universities.

So- in Kenya we have The Higher Education Loans Board which provides students who are in either public or private universities with loans to cover their tuition costs.
This body was established in July 1995 by the Kenyan Government- and at the turn of the millennium it incorporated private institutions too.

Undergraduate students get loans that attract a 4% interest per annum, while post-graduate student loans attract 12% per annum.

So, how does this work? And why did I talk of the need for graduates to secure jobs immediately after school?

See, the way HELB works- you are expected to start repaying the loan a year after your graduation. That means the government gives you 12 months to secure a job and start paying your dues, and this is quite reasonable compared the student loans in countries like America and the United Kingdom.

So, what's the problem here?
Well- there are two kinds of problems- but let us call them challenges (frankly speaking the word 'problem' feels more like a verdict to me, just like 'crazy' is not cool when uttered around an asylum!)

1. The downside of human nature: receiving is great, but giving is a challenge,hence so many loan defaulters reaching far back from 1952!
2. Securing a job, and being disciplined enough to set aside at least a thousand shillings every month towards repaying the loan.

And Kenya is not the only country that's facing this, in America the total outstanding student loan debt is $1,011,654,459,649. This means that 37 million Americans have student loans- and you can read more about that here

When I was looking into the history of schools- I could not help but think that some founders would be pleased with what is happening right now with the education system. Schools were to be centers of academic excellence. Students were meant to love knowledge, seek it and to be able to express themselves like great thinkers and philosophers, hence the demand for languages like Latin and Greek! And to secure only the elite, schools had to be expensive- because the more expensive and lavish a school is, the higher the sense of elitism! Now wouldn't those proud founders be proud?

So, if you are reading this and you are a graduate like me, and say you did get help from HELB, then your life is like this...

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But this should not be the case, because when it comes to debt- any kind of debt, you can always think of it in small doses, if you are lucky to get a job where you earn at least Ksh. 15,000 every month- and you are still one year clear of paying your student loan- save Ksh.1000 every month! At the end of the year you shall have saved Ksh. 12,000 or Ksh. 11,000 (if you don't work in December)- deposit that amount in HELB's loan repayment account and write the accountant a letter requesting the body to deduct a certain amount from your monthly wages. Most students stay for a year past their deadline and then complain when the body deducts Ksh.5000 from their account- and to this all I can say is "a debt is a debt, you'd better pay up!"

This system of student loans- is also a way of the government keeping the economy in check- because citizens not only pay taxes, there's also a loan to be paid and with interest!

Higher education should not be expensive- but the value it is accorded in Kenya makes it so. If we could shift the same to job creation- then we'd be way past being deemed a third world country. So, first- if you are interested in higher education and are a Kenyan citizen, and would like a student loan just visit www.helb.co.ke and read up on the loan requirements then send in your application.

And having looked at student loans- I will focus on job creation and why there's the need for that more than simply acquiring papers.
I will also share more of what I learned about repaying student loans- and list the reasons why most graduates are loan defaulters.
How can one change the world if one identifies oneself with everybody?