HESLB Loan Deductions: What Employers in Tanzania Must Notify, Deduct and Remit

This guide sets out the HESLB loan deductions rules for Mainland employers: the governing sections, the notification and remittance clock, the basic salary base, the penalty and how it is read, the end of the value retention fee, what to do when a beneficiary leaves, and where the deduction sits beside PAYE and NSSF. It closes with the Zanzibar position and a worked example in Tanzanian shillings.

Who should read this

• Mainland employers of any size who hire diploma or degree holders, in the private or public sector.
• Payroll and finance teams who run the monthly PAYE, SDL, NSSF and WCF cycle and now add a fifteenth-day HESLB remittance.
• HR managers who onboard graduates and process exits, and who hold the personnel file that HESLB may inspect.
• Chief executives and accountable officers of companies, because section 22 makes them personally liable for the employer's penalty.
• Employers on Unguja and Pemba, who may owe duties to two different loans boards, as explained below.

The wider payroll cycle is covered in our guides to PAYE and net salary and NSSF and PSSSF contributions.

What the law says: sections 21 and 22 of Cap. 178

The Higher Education Students' Loans Board Act was enacted as Act No. 9 of 2004. The TanzLII record of the Act shows assent on 4 June 2004 and lists later amendments, including the Finance Act, 2021. The current text is the Revised Edition 2023, Cap. 178, held in the Office of the Solicitor General e-library with a publication date of 1 July 2025.

The Revised Edition lists the amending Acts as Nos. 9 of 2004, 17 of 2007, 10 of 2013, 4 of 2014, 13 of 2016, 2 of 2017 and 3 of 2021. We read the employer provisions in that edition on 25 October 2026:

• Section 21(1)(a) requires an employer who hires a degree or diploma holder to notify the Board within twenty-eight days from the date of employment.
• Section 21(1)(b) requires the employer, upon confirmation from the Board that the person is a loan beneficiary, to deduct monthly instalments of not less than fifteen percent of basic salary, wages or remuneration.
• Section 21(1)(c) makes those deductions a first charge over non-statutory deductions.
• Section 21(1)(d) requires the employer to inform the Board in writing of the status and rank of employment and of later changes in name, address, occupation and salary.
• Section 21(2) sets the remittance deadline: within fifteen days after the end of each month.
• Section 22 sets the employer's penalty, makes non-remittance of deducted amounts an offence, and makes the chief executive of a corporate employer personally liable.

Older copies number these provisions differently. The 2008 consolidation still posted on the HESLB website places employer duties in section 20 and the penalty in section 21. Cite the Revised Edition 2023 numbers in any letter to HESLB, and check which edition a counterparty is quoting.

Which employees are HESLB beneficiaries?

The notification duty is wider than the deduction duty. Section 21(1)(a) catches every new employee who holds a degree or diploma, whether or not the employer believes the person took a loan. HESLB then matches the list against its records and tells the employer who is a beneficiary.

Deduction starts only after that confirmation. HESLB's employer obligations page describes the same order: the Board analyses the credentials, sends them to the employer, and the employer then deducts and remits.

The beneficiary carries parallel duties under section 19(6). The employee must tell the employer of the loan, arrange the deductions, make sure they reach the Board, and report the employer's details and any change of name or address. An employee's silence does not excuse the employer, because the employer's own notification duty runs from the date of hire.

Repayment falls due after completion of studies. A proviso to section 19 requires a beneficiary to start repaying after two years from completion, and HESLB's repayment FAQs state the same 24-month point. In practice, once HESLB confirms a beneficiary on the payroll, the employer deducts from the next payroll.

How much is deducted: 15% of basic or gross salary?

The statute says basic salary. Section 21(1)(b) of the Revised Edition reads "not less than fifteen percent of basic salary, wages or remuneration". HESLB's loan repayment page also states 15% of basic salary.

Some sources say gross. A HESLB statement reported in February 2021 described the deduction as 15% of gross salary. Many online calculators follow that reading. The Act does not define "basic salary", and the words "wages or remuneration" leave room for argument where an employee has no separate basic figure.

The 15% figure is a floor, not a ceiling. An employee may ask to pay more, and HESLB may agree a higher instalment to clear the balance sooner. The change from 8% to 15% followed the 2016 amendment, and a report carried by allAfrica in January 2017 described it as 15% of basic salary from 1 January 2017.

Our practice point: deduct on the basic salary line in the contract, keep that line realistic, and record HESLB's written confirmation of the amount it bills. If HESLB's bill uses a different base, raise it in writing before the remittance date rather than short-paying.

When must the deduction be remitted, and how?

The deadline is the fifteenth day after the end of the month in which the salary was paid, under section 21(2). October deductions are therefore due by 15 November. HESLB's repayment page asks for the money, the proof of payment and the deduction schedule by the same date.

Payment runs through the Government e-Payment Gateway. The employer obtains an employer control number from HESLB and pays against it by bank or mobile channel. HESLB states that the control number does not change, so the same number serves every month.

Schedules and new-employee lists go through the employer repayment portal on HESLB's OLAMS system, linked from the employer login page. Keep the schedule and the payment receipt together for each month, because a payment without a schedule cannot be allocated to individual loan accounts.

What is the penalty for late or missing remittance?

Section 22(1) charges the employer a sum equal to "ten percent of the total amount of the loan amount which is due for repayment" for each month during which the repayment remains unremitted. HESLB's employer page describes the same charge as 10% of the monthly deduction amount.

The wording can be read two ways. On one reading, each late monthly instalment attracts a single 10% charge. On the stricter reading, the 10% recurs for every month the instalment stays unpaid. The worked example below shows both, because the gap widens quickly.

The criminal provisions are separate from the charge:

The section 22(2) offence is the one that worries boards. Money taken from an employee's pay and kept by the company is treated far more seriously than money never deducted. A cash-flow squeeze is not a defence. Prosecution, and any response to a demand that threatens it, belongs with an advocate.

Is the value retention fee still charged?

No, not since 1 July 2021. The 6% annual value retention fee on outstanding balances and the 10% penalty on beneficiaries who missed the 24-month start were announced as scrapped from that date during the 2021/22 education budget. allAfrica carried the report in May 2021.

The Finance Act, 2021 then amended section 7 of the Act. Bowmans summarised the change on 12 July 2021. Section 7(2) of the Revised Edition now says the Board shall not impose a retention fee or any other fee, charge, penalty or payment on loan repayment without the Minister's approval, given in consultation with the Minister for finance.

Two points follow for employers. First, the beneficiary's balance should no longer grow by a retention fee, so an employee who disputes a statement may ask HESLB for a recomputation. Second, section 7(2) protects former beneficiaries; it does not remove the employer's section 22 charge, which sits in the Act itself.

We found no current HESLB notice waiving employer penalties. HESLB's recent public campaigns, reported by Torch Media on 13 October 2026, target informal-sector beneficiaries rather than employers. Treat any waiver as unknown until HESLB confirms it in writing for your account.

What happens when a beneficiary leaves?

The Act has no section dealing expressly with termination or resignation. The duties that apply come from the general reporting rules:

1. The employer reports the change in "status" of employment under section 21(1)(d). In practice, the leaver is removed from the next monthly schedule with the exit date shown.
2. The last ordinary deduction is taken from the final month's salary and remitted by the fifteenth of the following month.
3. The employee must tell the Board of the new employer under section 19(6)(d).
4. The new employer files its own notification within 28 days of the start date under section 21(1)(a).
5. If the person becomes self-employed, the monthly amount becomes the greater of TZS 100,000 or 10% of taxable income under section 19(8).

Can an employer take the whole outstanding loan from terminal benefits? The Act does not say so. Section 21(1)(b) authorises a monthly instalment, and the Employment and Labour Relations Act allows deductions only where a written law requires or permits them, or where the employee agrees in writing to a deduction for a debt. Our reading is that a lump-sum recovery needs the employee's written agreement. Our severance pay guide sets out the rest of the final pay file.

Where does the HESLB line sit in the payroll order?

The deduction is taken from pay after tax and social security are worked out. Two rules decide the order. The Income Tax Act gives no deduction for student loan repayments, so PAYE is calculated without reference to the HESLB line. Section 21(1)(c) of Cap. 178 then ranks the HESLB deduction ahead of non-statutory deductions such as SACCOS, bank loans and salary advances.

Is there a cap on total deductions? The Employment and Labour Relations Act, read on TanzLII in its 2004 text, limits deductions for loss or damage to one quarter of the employee's money remuneration. That limit sits in the loss-and-damage provision. It does not cap deductions required by a written law, which is where the HESLB instalment falls.

The 2004 HESLB text had a proviso limiting deductions to one third of net income. The phrase "net income" does not appear in the Revised Edition 2023, so we treat that cap as gone. Where statutory and voluntary deductions together leave an employee with little take-home pay, reduce the voluntary lines first and record why.

PAYE and SDL are paid to TRA within seven days after the month ends; the TRA PAYE page sets out the regime. HESLB follows on the fifteenth. Our guide to the Skills and Development Levy covers the ten-employee threshold.

What is the position in Zanzibar?

Section 2 of Cap. 178 says the Act applies to Mainland Tanzania as well as Tanzania Zanzibar. An employer in Zanzibar who hires a graduate financed by HESLB therefore still owes the section 21 duties to HESLB.

Graduates financed by the Zanzibar board are under a separate law. The Zanzibar Higher Education Loans Board was created by Act No. 3 of 2011. A Bill to repeal it and establish the Zanzibar Higher Education Students' Loans Board was published in the Zanzibar Gazette Bill Supplement of 7 November 2023. An IOU notice of 13 November 2024 cites the new law as Act No. 2 of 2024, operating from March 2024. We could not read the enacted text.

The Zanzibar column is drawn from the Bill and may differ from the enacted Act. Confirm the current rules with the Zanzibar board before setting up deductions for its beneficiaries. PAYE is a Union tax and goes to TRA in both places.

Worked example: 12 staff, 4 beneficiaries

This example is hypothetical. A Dar es Salaam company has 12 employees. HESLB has confirmed 4 of them as beneficiaries. Their basic salaries and the 15% deductions are:

Monthly remittance. The company pays TZS 840,000 against its HESLB control number by the fifteenth of the following month, with the schedule. With 12 staff it is also above the SDL threshold (F0276).

One payslip. The accountant earns a basic of TZS 1,500,000 plus a housing allowance of TZS 300,000. We assume NSSF on gross pay at 10%, which is TZS 180,000 (F0279). Taxable pay is TZS 1,620,000, so PAYE is 128,000 + 30% x 620,000 = TZS 314,000 (F0180). HESLB takes TZS 225,000 on basic salary. Net pay is 1,800,000 - 180,000 - 314,000 - 225,000 = TZS 1,081,000.

Six months without remittance. Suppose the company deducts from April to September but remits nothing. Unremitted principal reaches 6 x 840,000 = TZS 5,040,000.

• Single charge reading: 10% of each monthly instalment, once, is 6 x 84,000 = TZS 504,000.
• Recurring charge reading: the April instalment is late for six months, May for five, and so on. The charge is 84,000 x (6 + 5 + 4 + 3 + 2 + 1) = 84,000 x 21 = TZS 1,764,000.

The cash exposure is therefore TZS 5,544,000 to TZS 6,804,000 before any prosecution. Because the money was deducted from pay, section 22(2) also applies: a fine of not less than TZS 5,040,000, or imprisonment of not less than 36 months, with the chief executive personally liable under section 22(3).

Missed notification. If the company had also failed to report a new graduate hire, the section 21 offence carries a fine of not less than TZS 1,000,000. Filing the list on time costs nothing.

What to do now

1. Audit the payroll. List every employee with a diploma or degree and check that each was reported to HESLB within 28 days of the start date.
2. Register on the portal. Confirm your employer account on OLAMS and obtain the employer control number.
3. Fix the base. Make sure each contract shows a basic salary line, and apply 15% of that line unless HESLB bills a higher amount in writing.
4. Rank the deduction. Set the payroll system so the HESLB line runs after PAYE and NSSF and before SACCOS, bank and advance deductions.
5. Diary the fifteenth. Pay and upload the schedule by the fifteenth day after month end, with the receipt filed against the schedule.
6. Clear arrears. If any month is unremitted, pay the principal now, ask HESLB for a written statement of the section 22 charge, and keep the correspondence.
7. Handle exits. Remove leavers from the next schedule with the exit date, and do not recover a lump sum from final pay without written consent.
8. Keep the file. Retain notifications, confirmations, schedules and receipts with the payroll records for inspection under section 21.

Records retention is covered in our guide to payroll records in Tanzania, and contract wording in employment contracts and workplace policies.

Key dates

How Zatra helps

Zatra reviews payrolls for unreported graduates, sets up the HESLB line in the deduction order, reconciles HESLB bills against basic salary, and prepares the monthly schedule with PAYE, SDL, NSSF and WCF. We also prepare arrears positions and the correspondence to HESLB.

Our payroll compliance service runs the monthly cycle. The HR consulting service handles onboarding checklists and exit files. Employer registrations are covered in our guide to labour, OSHA, WCF and NSSF registration and the WCF employer duties guide.

Costs come in two separate buckets. Government charges, including HESLB remittances and any section 22 charge, PAYE, SDL, NSSF and WCF, are paid at the official amount to each authority against its own control number. Zatra's professional fee is quoted on its own line and never mixed with them. Zatra prepares and files, but does not decide or guarantee any authority's outcome. Prosecutions, seizure or attachment, disputes with HESLB and formal legal opinions go to an advocate.

Sources and status

Accurate as at 25 October 2026.

• Higher Education Students' Loans Board Act, Cap. 178 R.E. 2023: Office of the Solicitor General e-library, dated 1 Jul 2025; ss.2, 7, 19, 21, 22, 24. Accessed 25 Oct 2026.
• Higher Education Students' Loans Board Act, 2004: TanzLII; assent and amendment history. Accessed 25 Oct 2026.
• HESLB Act consolidation of 2008: HESLB; older numbering. Accessed 25 Oct 2026.
• HESLB: Employer and beneficiary obligations: undated page. Accessed 25 Oct 2026.
• HESLB: About loan repayment: undated page. Accessed 25 Oct 2026.
• HESLB: Loan repayment FAQs: undated page. Accessed 25 Oct 2026.
• Employment and Labour Relations Act, 2004: TanzLII; deductions provision. Accessed 25 Oct 2026.
• TRA: Pay As You Earn: TRA. Accessed 25 Oct 2026.
• Zanzibar loans board Bill: Bill Supplement, 7 Nov 2023. Accessed 25 Oct 2026.
• Zatra fee register lines F0176 to F0180, F0276, F0279 and F0281: fees at 26 Sep 2026; no HESLB line. Accessed 25 Oct 2026.

Figures to confirm before you act

• Deduction base: basic salary under s.21(1)(b) and HESLB's page; some HESLB statements and calculators use gross
• Penalty reading: whether the s.22(1) charge applies once per late instalment or for every month it stays unpaid
• Employer penalty waivers: none found; confirm with HESLB for your account
• Offence subsections: the failure-to-notify offence sits in s.21; confirm the subsection in the printed Revised Edition
• Lump-sum recovery on exit: not provided for in the Act; our reading requires written consent
• Zanzibar: enacted text of the 2024 Act, its reporting period, rate and penalties
• NSSF base and deadline: whether allowances are contributory for a given employee, and NSSF's monthly due date

This article is general information based on official sources available at the date of publication. It is not legal, tax or financial advice. Laws and notices change. Verify with the issuing authority or consult Zatra before acting.