Higher Education Loans Board has partnered major banks to develop pre-paid electronic cards which students will use to pay for tution, upkeep, buy books and stationery.
The new system will allow for tracking of borrowers’ future bank transactions and helb build financial profiles of Helb beneficiaries, including their payment records. KCB Group, Chase Bank, National Bank, Equity Bank Jamii Bora Bank and NIC Bank are the financial institutions involved in the process.
With the board currently sending between sh27,000 and sh52,000 to undergraduate students’ bank accounts in two equal instalments while sh8,000 is wired directly to universities as tuition fee. The new cards will have tap and go features based on the Near Field Communication technology.
“We want to start building the student credit history which will help the student as they build their credit scores for purposes of future borrowings from financial institutions,” said Helb CEO Charles Ringera in an interview by the businessdaily.
The use of the cards will reduce the growing cases of misuse of student loans where funds meant for school fees is splurged on drinking alcohol buying electronics such as smartphones luxurious accessory. This will now serve as a fast and convenient ways to issue loans to students other than the usual bank transfers.
KCB Group is currently running a pilot study on the cards at Egerton University whereas Family Bank and London based payments firm sQuid is currently piloting the same at the Kenya Methodist University where students will receive loans directly as e-money and tap their cards on point of sale terminals for meals, accommodation, books, photocopying and other items.