Court prevents Helb from demanding exorbitant fines

The High Court has barred the Higher Education Loans Board (Helb) from imposing interest, penalties or fines in excess of the principal amount, ruling it unconstitutional.

Judge Alfred Mabeya ruled in favor of three beneficiaries of the Helb loans, who had appealed the agency’s decision to impose the interest and penalties on their bad loans.

Petitioners Ann Mugure, Davis Nguthu and Wangui Wachira argued that the interest rates and penalties were exorbitant and violated their constitutional socio-economic rights.

“It is hereby declared to Respondent (Helb) that by assessing interest and fines in excess of the principal amount, Respondent violates Article 43(1)(e) and (f) and Article 27 of the Basic Law of Kenya,” Judge Mabeya said in the Verdict.

According to court documents, the trio took out loans from Helb on various dates to help with their undergraduate studies, but the exorbitant interest rates and penalties had made their repayment difficult.

The petitioners noted that on November 19, 2020, Helb, via his Twitter handle, threatened to publish debtors’ names and photos in leading newspapers and issued a 30-day repayment notice.

Ms Mugure, a disabled youth, took out a loan of Sh82,980 at an interest rate of 2 per cent in July 2004 and by July 2016 the debt had accumulated to Sh540,464.

Mr Nguthu borrowed Sh146,090 in July 2016 which rose to Sh335,207 by March 2021 while Ms Wachira borrowed Sh135,000 in July 2016 which rose to Sh336,573 by February 2021.

The latest data from Helb shows that credit accounts currently stand at 94,216 from the 109,661 credit accounts listed in February, with unpaid loans at Sh10.2 billion.

Helb offered a 100 percent waiver of fines starting March 1 to encourage recovery following the impact of the impact of Covid-19 on the economy.

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