Higher Education Loans Board (HELB) has been stopped by the High Court from imposing interests and penalties on its beneficiaries that are beyond the principal amount.
This halt comes following a petition by three HELB beneficiaries; Ann Mugure, Davis Nguthu and Wangui Wachira.
The three individuals went to court to challenge HELB’s decision imposing interest and penalties on their non-performing loans.
Moreover, court papers indicate that the three petitioners borrowed loans from the board to fund their undergraduate studies, but the high interests and penalties had made their ability to repay difficult.
The trio told the court that HELB had threatened to publish the names and photos of defaulters in local dailies on November 19, 2020, issuing a 30-day ultimatum.
Nonetheless, in his ruling, Justice Alfred Mabeya said the interest imposed and penalties on the non-performing loans was unconstitutional.
“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.
Furthermore, HELB has been encouraging loanees to repay their loans to allow the facility to benefit other students.
Moreover, they offered an incentive of a 100 percent penalty waiver which the board gave in March this year against the backdrop of COVID-19 pandemic’s effect on the economy.
The waiver which was dubbed ‘Kamilisha Malipo Ya HELB’, the was initially scheduled to run from March 1 to April 30, but was later extended to June 30.
Likewise, HELB data shows that loan accounts in default currently stand at 94,216, down from the 109,661 recorded by February,
Nevertheless, unpaid loans stand at Ksh.10.2 billion.
