The Higher Education Loans Board (HELB) is set to partner with the Kenya Revenue Authority (KRA) to recover billions of shillings in unpaid student loans from borrowers in Kenya's informal sector.
The move targets thousands of beneficiaries who have remained outside traditional payroll deduction systems, using KRA's advanced data-driven enforcement tools to trace financial activity.
HELB says the partnership aims to improve loan recovery while ensuring fairness, as the institution grapples with rising defaults linked to youth unemployment.
HELB to Partner With KRA to Recover Loans From Informal Sector Defaulters
HELB has announced plans to collaborate with KRA in a renewed effort to recover outstanding student loans from borrowers working in the informal economy.
HELB Chairperson Ekwee Ethuro said the partnership is necessary because many loan beneficiaries operate outside formal employment, making loan recovery difficult.
Unlike salaried workers whose repayments are deducted directly from their pay, informal sector workers often fall outside existing recovery mechanisms.
Ethuro described KRA as a suitable partner because of its extensive data systems and nationwide reach.
Why HELB Is Turning to KRA
According to HELB, recovering loans from informal earners has remained one of the institution's biggest challenges.
Many beneficiaries now work in:
- Jua kali businesses
- Small enterprises
- Gig economy jobs
- Self-employment
Without employer payroll records, HELB has struggled to track repayments from these borrowers.
KRA's digital tax systems are expected to help identify financial activity that can support loan recovery efforts.
HELB Loan Default Statistics
| Category | Number |
|---|---|
| Total loan defaulters | Over 380,000 |
| Chronic defaulters | More than 124,000 |
| Defaulters unpaid for over 10 years | More than 83,000 |
| Outstanding loan portfolio | Ksh20 billion |
KRA's Data Systems Could Boost Recovery
HELB says KRA's technology-driven compliance systems make it easier to identify individuals with active financial transactions.
The tax authority uses digital tools such as:
| KRA Enforcement Tool | Purpose |
|---|---|
| Data matching | Identify undeclared income |
| Mobile money monitoring | Track business activity |
| Till transaction analysis | Detect business turnover |
| Lifestyle and asset audits | Verify financial capacity |
According to Ethuro, these systems can reveal financial footprints that HELB cannot easily access.
The partnership is therefore expected to improve the recovery of unpaid loans without relying solely on employer payroll deductions.
HELB Says Recovery Is Not About Punishment
Ethuro emphasized that the initiative is not intended to intimidate borrowers or threaten them with imprisonment.
Instead, HELB wants beneficiaries to honor their repayment obligations so that future students can also access education financing.
The board says improving loan recovery will strengthen the sustainability of the revolving loan fund.
Formal Sector Crackdown Already Underway
The proposed collaboration follows HELB's ongoing enforcement efforts in the formal sector.
Employers are already required to:
- Submit employee information.
- Deduct HELB repayments from qualifying staff.
- Remit deductions by the 15th of every month.
In March 2026, HELB introduced stricter penalties for employers who fail to comply.
Organizations that do not declare employees with outstanding HELB loans or fail to remit deductions face a Ksh3,000 monthly penalty per employee, backdated to the employee's hiring date.
Recovery Strategy at a Glance
Loan Defaulters │ ▼ KRA Data Systems │ ▼ Identify Financial Activity │ ▼ Loan Recovery │ ▼ Support Future Student Financing
The proposed HELB-KRA partnership signals a major shift in student loan recovery efforts.
By leveraging KRA's digital enforcement capabilities, HELB hopes to recover billions in unpaid loans, improve compliance among informal sector borrowers, and secure sustainable funding for future generations of university and college students.
