THE Higher Loans Board plans to introduce smart cards instead of cash to cut down on "wasteful" expenditure by university students, chief executive Charles Ringera said on Tuesday.
This is part of innovation by the state-run higher education credit agency to reduce loam defaults now standing at Sh7.1 billion.
The card which could be launched when the next cycle of cash is disbursed will ensure the loan is used for intended purposes.
Ringera said the HELB loans are meant for tuition, library and accommodation costs only.
"But most students end up using this money for entertainment and other expenditures that are not covered by the loan," he said in Nairobi. "We should be launching this card in the next three to four months and it will ensure they cut down on frivolous spending."
The card is being developed in partnership with various commercial banks, he said.
Ringera said students who exhibit prudent expenditure behaviours will increase their reputation collateral for loans from commercial banks after collegel.
"Since we are starting to share credit information as lenders, the students who prove to be efficient in their expenditure will stand a better chance of getting apprentice loans in future," he said.
Starting next financial year, HELB has raised minimum loan by Sh20,000 to Sh60,000.
It presently offers credit facilities to about 150,000 but has set eyes on 2.5 million by year 2030.
Earlier in the year, the board offered an amnesty for former students who voluntarily cleared their outstanding loans, a drive that netted Sh1.2 billion in just 60 days, according to the HELB CEO.