Student loans and public support in Tanzania

By Martina Joseph – Art in Tanzania internship

The Higher Education Student Loan Scheme (HESLS) was established in Tanzania in 1994 to encourage cost sharing in higher education. After the introduction of the HESLS in 1994, the loans have been funded by   the government through the Ministry of Higher Education, Science, and Technology (MHEST). At that time, the government made a number of changes/reforms in an effort to improve the implementation of the policy. However, the biggest reform ever took place in 2004 with the enactment of Act No 9 of 2004 (CAP 178) as amended and the subsequent establishment of the Higher Education Student Loan Board (HESLB). HESLB started operations in July 2005 and since then the loans have been advanced by the government through HESLB. The HESLB was set up to provide financial facilitation in terms of loans to eligible and needy students to help them pay for their education (HESLB Act, 2004). In addition to increasing efficiency in the disbursement and collection of loans, two primary tasks are also assigned to HESLB. The task of establishing a mechanism for the determination of eligible and needy Tanzanian students for the payment of loans in order to increase equitable access to technical and higher education. And to create a well-performing, sustainable student loan fund (URT, 1998).

Based on the economy and the cost of education as per public institutions, HESLB shall set a ceiling for each student. The ceiling depends on which university one attends and which courses one pursues. The plan was to lend money only to eligible and needy poor students, but there is still a challenge as to how to identify them. Moreover, HESLB has limited autonomy in the decision-making process on some of the strategic issues, such as the selection of students to be enrolled. Classification of priority courses, determination of the fees charged for higher education, selection of oversea students’ studies and improvement of the legal framework for the enforcement of collection. Similarly, the conditions for the repayment of the loan are extremely generous and apply extensively. Repayments are spread over a period of ten years following a one-year grace period. The percentage shall be fixed at 8% of the basic salary instead of the gross salary; the repayments shall be in nominal terms and the loans shall be in gross salary and the loans are free of interest.

Issues raised in relation to Student loans in Tanzania

 Is the loan sufficient

A study done by Ally (2015)  showed the ceiling amounts for students to borrow for each loan item, is as follows, maximum Tuition fees Tshs 3,600,000.00 (US$ 2250). Meals and accommodation Tshs 7,500.00 per day (US$ 4.69), books and stationery Tshs 200,000.00 (US$ 125) per annum. In addition, field practical / teaching practical work expenses Tshs 560,000 (US$ 350) in a year. In sum, the amount given to the student in a year is relatively higher compared to its neighboring country Kenya. Evidence (e.g. from Tanzania) shows that, shows that in many cases, governments do not allocate sufficient financial resources to enable loans schemes to meet their statutory obligation of issuing loans to needy students. The majority of schemes in Africa operate with lean budgets that cannot cover their operational costs and absorb the rising cost of higher education and expanded enrollments in many universities. Inadequate financial resources are largely due to dependence on government funding (Kossey, M & Ishengoma, J. 2017)

Challenges Related to Management and Administration

Observation and documentary evidence show that top managers and administrators as well as employees of most student loans schemes are not professionals trained in disciplines relevant to student financing. For example, one of the longest serving top administrators of a student loans scheme in one of the countries mentioned above trained as a linguist. In Tanzania, the chief executive officer and chairperson of the board of directors of the HESLB are presidential appointees. This implies limited independent decision-making and vulnerability to political pressure and manipulation to make decisions that favor the establishment or the ruling party.

Do students get the loans on time

In November 2008, University of Dar es Salaam students protested over loans. Ernest Sylivester (2008) wrote that protests have been happening in University of Dar es salaam after the student loans board announced this month that some 810 students had not met the requirements for funding. Students threatened protests and boycotts if all students who were admitted to universities and had applied for loans, did not receive them. Hundreds of students from several universities visited the Higher Education Students’ Loan Board (HESLB) to check up on their loans and many demanded a relook at the loan ‘grades’ they had been allocated. There were complaints that some students who qualified for loans had not been awarded them, while others who did not meet the requirements had nevertheless received loans. This is to show that some instances students do not get their loans on time.  Furthermore a study conducted by ( Kossey, M & Ishengoma, J. 2017) found that 86% of the student respondents reported that they did not receive loans on time. In extreme cases, some students did not receive their loans for a whole semester. HESLB officials admitted that there had been delays in loan disbursements because the government does not release requested funds to the Board on time.

What could be done? (Recommendation)

The problems faced by HESLB in Tanzania are not unique several financial organizations experience the same issues in Kenya, South Africa and many other African countries. However, the following recommendations can be implemented to see an improvement in our higher education financing.

  1. Diversification in funding.

The Board should diversify its sources of funding. This can be done by undertaking other streams of revenue activities to greatly minimize its sole dependence on the government. It should explore partnerships with potential financiers and investors in higher education such as banks and companies. This financing modality has worked in Mauritius and Kenya. In 2013, the HELB partnered with the Latimer Education Company based in the United States to increase its funding (Nganga, 2013). The Board also partners with Intra Health of Kenya to provide loans to student’s pursuing medical and health related qualifications. The HESLB could also consider borrowing from international banks such as the African Development Bank and the World Bank.

2. Mandatory Repayment of HESLB loans

It should be done through direct deductions by employers from loans beneficiaries’ salaries as with income tax and social security funds. This would reduce the costs of tracing loan beneficiaries and improve the level of loan repayments. To achieve this a high degree of effectiveness in the legal framework would be required. Loan recovery could be further strengthened if the HESLB were to partner with the National Identification Authority or the national social security funds which would provide identification numbers to all loans applicants that could be used to track beneficiaries employed in the formal sector. This strategy has been employed by the HELB in Kenya.

3. Raising awareness

Aggressive public education and campaigns are required on the meaning and importance of student loans and loan repayment. This approach has been very successful in Ghana.

4. Improvement on Eligibility criteria

It is suggested that HESLB has to improve their mechanisms that allows them to determine who is eligible for the loan or not so as to reach the needy poor students who need it more. To make it happen it has to cultivate a good relationship with other players such as secondary schools, Tanzania Tax Authorities and other entities which HESLB can obtain one’s income. 

5. HESLB should be given full autonomy

Government should provide HESLB full autonomy in making decision on some of strategic issue such as enrollment, categorization of priority courses, tuition fee charged in higher education, the legal framework to enforce collection.


Ally, A. M. (2015). Sustainability of Higher Education Students’ Loan Scheme (HESLS) in Tanzania.  The European Journal of Business and Management,  Vol.7, (No.9)

Ernest, S. (2008).  TANZANIA: Students warn of protests over loans. University World news African Edition. Retrieved from on 06/03/2021.

HESLB Act number 9 of 2004 CAP 178

Kossey, Masumbuko & Ishengoma, Johnson. (2017). Issues and Challenges of Student Financing Systems in Africa: The Case of Tanzania. International Journal of African Higher Education. 4. 10.6017/ijahe.v4i1.10250.

Nganga, G. (2014 November). Student loan systems restructured across

East Africa. World University News, Issue No. 296

Nganga, G. (2014 November). Student loan systems restructured across

East Africa. World University News, Issue No. 296

Nganga, G. (2014 November). Student loan systems restructured across East Africa. World University News, Issue No. 296 The United Republic of Tanzania (1998), Financial Sustainability of Higher Education in Tanzania: A Report of the Task Force on Financial Sustainability of Higher Education in Tanzania. Dar es Salaam: Ministry of Science, Technology and Higher Education

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