- The High Court has ruled that HELB cannot recover more than double the original loan amount from borrowers through accumulated interest and penalties.
- Justice Mabeya has declared Section 15(2) of the HELB Act unconstitutional to the extent that it allowed interest and fines to exceed the principal loan amount.
- The court has found that excessive HELB charges violated Article 43 of the Constitution, which protects the right to social security and education.
By Lizzy Aluga
The High Court has ruled that the Higher Education Loans Board (HELB) cannot recover more than twice the original amount advanced to borrowers, in a decision that limits how the board can accumulate interest, penalties and fines on student loans.
The petitioners, students Anne J. Mugure, Davis Nguthu and Wangui Wachira, argued that they had borrowed loans from HELB to facilitate their undergraduate studies, but that the board had been charging excessive interest that grew beyond double the principal amounts they owed, making repayment difficult. They sought declarations that imposing interest amounts and penalties exceeding the principal amount contravened Articles 43(1)(e) and (f) of the Constitution of Kenya 2010, among other orders.
Justice Mabeya ruled in favour of the students, finding that HELB cannot charge cumulative interest and penalties beyond the principal amount borrowed. The court issued a declaration that HELB had acted unlawfully by imposing interest amounts and penalties or fines that exceeded the principal amount. It further declared Section 15(2) of the HELB Act unconstitutional to the extent that it allowed interest rates and fines to exceed the principal amount advanced.
The court also declared that HELB was not entitled to recover from petitioners or its loanees an amount exceeding double the amount originally advanced.
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The court said excessive charges could leave young borrowers trapped in growing debt and undermine their socio-economic rights, finding that such penalties were inconsistent with Article 43 of the Constitution, which protects the right to social security and education. The ruling means HELB cannot continue increasing a borrower’s outstanding loan indefinitely through additional charges once the amount reaches twice the original principal.
HELB provides loans and other financial support to students pursuing higher education, with beneficiaries expected to repay the money after completing their studies.
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The ruling limits how much the board can recover from borrowers while maintaining the requirement for beneficiaries to repay their loans, and seeks to protect student-loan beneficiaries from the indefinite accumulation of interest, penalties and fines.
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