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Tanzania grapples with Sh1trn unpaid student loan crisis
What you need to know:
- Since the introduction of student loans in the 1994/95 academic year, the government has disbursed Sh7.2 trillion to 754,000 students
Dar es Salaam. The sustainability of Tanzania’s Higher Education Students Loans Board (HESLB) is at risk, with Sh760 billion in unpaid loan repayments, raising concerns about the future of higher education financing in the country.
Since the introduction of student loans in the 1994/95 academic year, the government has disbursed Sh7.2 trillion to 754,000 students.
However, of the 448,824 eligible beneficiaries, only 226,292 are actively making repayments.
By the end of 2023, total collections stood at Sh1.34 trillion, accounting for only 64 percent of the Sh2.1 trillion in mature loans.
HESLB has implemented measures to improve loan recovery, including tracking defaulters across both formal and informal sectors.
“We have intensified efforts to identify beneficiaries in employment and those operating in the informal economy,” HESLB executive director, Dr Bill Kiwia, said.
These efforts led to a rise in collections from Sh169.8 billion in 2022/23 to Sh177.6 billion in 2023/24, a five percent increase.
However, challenges persist in fully recovering the loans. Non-compliance among informal sector beneficiaries, who evade repayment, remains a significant issue.
Some employers fail to deduct and remit loan repayments promptly, while others submit incorrect deductions.
Furthermore, many graduates face irregular income, making consistent repayments difficult.
A report by the parliamentary committee on Education, Culture and Sports outlines systemic challenges, including HESLB’s dependency on government subsidies as its primary funding source.
The increasing number of loan applicants also strains available funds, limiting the board’s ability to meet the demand.
Additionally, the lack of integration between HESLB and key national databases, such as the National Identification Authority (NIDA), further complicates the tracking of beneficiaries.
To address these issues, HESLB has launched campaigns like ‘Sufurisha’ and ‘Fichua,’ aimed at encouraging compliance and defaulter identification.
These campaigns seek to raise awareness of the importance of loan repayment and expose those deliberately avoiding their responsibilities.
The government allocated Sh743.3 billion for student loans in the 2023/24 financial year, up from Sh570 billion in the 2021/22 fiscal year, to meet the growing demand for financial assistance.
On February 11, 2025, the parliamentary committee recommended an increase in HESLB’s budget to ensure all eligible students receive loans.
The committee also proposed transforming HESLB into a fully-fledged revolving fund, allowing the reinvestment of collected repayments into new loans.
Strengthening loan recovery mechanisms through improved data integration with NIDA and other agencies was also suggested.
Higher education financing expert, Dr Elizabeth Mwakyusa stressed the need for stricter enforcement measures.
“HESLB must enhance collaboration with financial institutions and tax authorities to track defaulters. The key is to link loan repayment to financial transactions,” she said.
Economist and policy analyst, Mr Joseph Mbowe called for exploration of alternative funding models.
“Reliance on government grants alone is unsustainable. Partnering with private entities and establishing an education investment fund could provide long-term solutions,” he explained.
As the demand for higher education loans continues to rise, ensuring the sustainability of the loan system is vital.
Strengthening recovery mechanisms, diversifying funding sources, and enforcing compliance will be key to securing HESLB’s future and guaranteeing financial support for generations of students to come.
