High Court Prevents HELB From Imposing Heavy Penalties To Defaulters

The Higher Education Loans Board (HELB) has been ordered by the High Court to stop charging its beneficiaries interest and penalties over the principal sum.

High Court Prevents HELB From Imposing Heavy Penalties To Defaulters

This comes in response to a lawsuit filed by Ann Mugure, Davis Nguthu, and Wangui Wachira, three HELB beneficiaries, who sought to have the lending body's decision to charge interest and penalties on their non-performing loans overturned.

The three claimed in court papers that they had taken out loans from the board to pay for their undergraduate studies, but that the excessive interest rates and penalties had made it difficult for them to repay.

The trio testified before the court that on November 19, 2020, HELB gave a 30-day deadline and threatened to publish the names and pictures of defaulters in local dailies.

Justice Alfred Mabeya ruled that the enforcement of interest and penalties on non-performing loans was illegal.

“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,” he stated.

HELB urged loan recipients to settle their debts to enable future students to secure loans for their higher education. 

HELB offered a 100 percent penalty waiver from March 1 to April 30 which was extended to June 30, to encourage loan defaulters to clear their debts.  

According to HELB data, there are currently 94,216 loan accounts that are in default, down from the 109,661 recorded by February. Meanwhile, the amount of unpaid loans is Ksh. 10.2 billion.