President Uhuru Kenyatta has cited sustainability concerns as the reason he rejected the proposed changes to Helb law.
Had he assented to the Helb (Amendment) Bill, 2021, unemployed loanees would have got a reprieve from repayment, until they secure jobs.
But President Kenyatta, in justifying why he vetoed the law, said: "This provision will adversely affect the sustainability of the Higher Education Loans Board as a revolving fund."
He said delayed repayment would reduce the amount recovered by Helb, negatively impacting the fund.
"Delayed commencement of repayment will reduce the amount recovered by Helb as well as decrease the number of students funded by Helb annually," the President said.
He said there would be challenges with determining the income of graduates who are not in formal employment.
"Those that are self-employed are not likely to declare they are generating income and are likely to fail or delay repaying their loans," President Kenyatta added.
He said loanees who have completed their studies are also likely to be precluded from making prompt repayments.
The President said enhanced recovery helps prevent overreliance on the exchequer.
"It is imperative that the status quo is maintained to prevent overreliance on the exchequer," he said in his memo to the National Assembly.
"In view of the foregoing, I recommend that Clause 2 of the Bill be deleted," President, while exercising his veto powers, said.
Parliament needs 233 members of the 349 voting to overturn the decision, a number impossible to raise with the August 9 election fever.
