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News in-depth: Kenyan students could receive loans through smart cards
10 Jan 2012

Students in Kenya could soon begin to receive their loans through a smart card, it has been revealed.

The African nation's Higher Education Loans Board (Helb) is currently locked in talks with local banks to develop a new smart card system to deliver funds touniversity students, reports Business Daily Africa.

Under the plans, funds used to cover the cost of tuition and accommodation will be transferred straight to a smart card rather than being credited to students' bank accounts.

According to Helb, the proposed system will help the organisation correlate its own records with those held by the universities. Currently, errors can occur in the payment of student loans when Helb is not immediately informed that students either defer studies or drop out of university.

Furthermore, banks participating in the scheme will be boosted by a rise in transaction income as they look to cut down on their reliance on income from interest rates or loans.

"While the model will help Helb track their records and students with better efficiency, banks will have to charge a commission for providing and maintaining the infrastructure," Kenya Bankers Association chief executive Habil Olaka told the news provider.

Although there are currently very few details about the plan available, the report claims that students are likely to be charged a monthly fixed fee and cash withdrawal charges for using the smart card service.

"Discussions over whether the students' cards will come Visa-enabled are also part of the negotiations we are having with the board," Mr Olaka added.

Banks will also aim to gather information on those students who they hope could become potential long-term customers and then use this data to tailor their product offerings.

Helb currently provides funds to around 80 per cent of the 143,130 students in public universities across Kenya.