Court stops Helb from imposing exorbitant fines over loan repayments

Helb offices in Nairobi

Applicants visit Helb offices in Nairobi. Most students in institutions of higher learning depend on Helb for tuition and upkeep expenses.

Photo credit: File | Nation Media Group

The High Court has stopped the Higher Education Loans Board (Helb) from imposing interest, penalties or fines that exceed the principal amount, terming it unconstitutional.

Justice Alfred Mabeya ruled in favour of three beneficiaries of the Helb loans that had challenged the agency’s decision to impose the interest and penalties on their non-performing loans.

The petitioners Ann Mugure, Davis Nguthu and Wangui Wachira argued that the interest rates and penalties were exorbitant and contravened their socioeconomic rights as enshrined in the Constitution.

“A declaration hereby issues against the respondent (Helb) that by imposing interest amounts and penalties or fines that exceed the principal amount, the respondent is in contravention of Article 43 (1) (e) and (f) and Article 27 of the Constitution of Kenya,” said Justice Mabeya in the judgement.

According to documents filed in court, the trio on diverse dates borrowed loans from the Helb to facilitate their undergraduate studies, but the exorbitant interests and penalties had made their ability to repay difficult.

The petitioners noted that in November 19 2020 through its Twitter handle, Helb threatened to publish the names and photos in leading newspapers of defaulters and issued a 30 day repayment notice.

Ms Mugure who is a youth living with disability borrowed Sh82,980 in July 2004 at an interest rate of 2 percent and by July, 2016, the debt had accumulated to Sh540,464.

Mr Nguthu borrowed Sh 146,090 in July 2016 that shot up to Sh335,207 by March 2021 while Ms Wachira borrowed Sh135,000 in July 2016 that has increased to Sh336,573 by February 2021.

The latest data from Helb shows loan accounts in default currently stand at 94,216 from the 109,661 recorded by February, with unpaid loans standing at Sh10.2 billion.

Helb offered a 100 percent penalty waiver from March 1 to encourage repayment following the impact of the Covid-19 effects on the economy.