Determinants of the Penalty Waive by the Defaulters: The Case of Higher Education Loan Board (HESLB) in Tanzania

Abstract

Higher education loan repayment has been one of the major challenges facing Higher Education Loan Board (HESLB). This study therefore, focused on exploring the factors for penalty waive on Higher Education Loan repayment. Also, the Ability to Pay Theory was the main source of inspiration for this paper. The study employed case study research design based on qualitative research approach. The purposive sampling technique was used to select 30 participants from HESLB. The collected data were analyzed by the use of thematic analysis. The study results revealed that the amount that was provided to the loanees was given in big amounts at once but in repayment, the beneficiaries were given some long time to pay in installment. Further, it was found that factors that motivated the establishment of the penalty waive for the default borrowers were complaints of the loan beneficiaries over charges, order from the president, motivation of the loan beneficiaries for voluntary compliance and creation of economic opportunity for the loan beneficiaries. Moreover, it was found that the trend of repayment had changed and increased following the penalty waive as the borrowers were repaying their loans in bulk and in time compared to the time before the penalty waive was in place. It was concluded that the appropriate way to make the loan beneficiaries to repay the loan is not to impose penalties and fines to them but to use the friendly way such as reminding them through phones to repay their loans. It was recommended that HESLB should create positive perception of the borrowers on the affordability of the loans so that they can repay quickly their loans.