The Higher Educations loans board (Helb) is a body set up by the government to give loans, bursaries and scholarships for training at public institutes recognized by the Ministry of Education. In the last financial year ending June the agency reported a loan recovery of sh0.1 billon higher from the previous sh3.9 billion. But can these student loans be converted to tradable securities? Is there a gap that the agency is not exploring? This has been the question on the minds of finance students like myself! I therefore present a win-win situation that will ease loan liquidity and also ensuring its stability.
The Agency can sell its “good books” to potential buyers who can convert the loan cash flows into Assets-Based Securities (ABS) and sell to the Capital Market and in turn acquiring fresh finances to continue its good work of lending to us needy students. One will ask what will be role of the government.
The government comes into the mix to play the part of the guarantor to help deal with the collateral risk and default risk which will be a lucrative deal to any potential investor. Having done all this the ball will now be on our coat as students to ensure we repay our loans to as soon as we get employment a year after graduation.