Student loan defaulters breathed a sigh of relief after the High Court barred the Higher Education Loans Board (HELB) from charging interest or fines exceeding the principal amount.

Justice Alfred Mabeya termed such actions unconstitutional in a case filed by three HELB loan beneficiaries who opposed its imposition of interest and penalties on their non-performing loans.

Davis Nguthu, Ann Mugure and Wangui Wachira had challenged the “exorbitant” interest rates and penalties arguing they contravened their Constitutional socioeconomic rights.

Justice Alfred Mabeya. PHOTO/JUDICIARY

“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,” Mabeya said in his judgment.

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In their court petition, the three said they borrowed HELB loans for their undergraduate studies but had difficulty repaying owing to the exorbitant interests and penalties charged.

HELB CEO, CPA Charles Ringera. PHOTO/ COURTESY

Davis, Ann and Wangui noted that HELB, via its Twitter handle, had threatened to publish names and photos of defaulters in top newspapers after a 30-day repayment notice elapses.

Nguthu borrowed Sh146,090 in July 2016 that hiked to Sh335,207 by March 2021; Anne, a person living with disability, took Sh82,980 in July 2004 and by July, 2016 her debt had shot up to Sh540,464; while Wangui borrowed Sh135,000 in July 2016 which accumulated to Sh336,573 by February 2021.

Loan accounts that have defaulted stand at 94,216 while unpaid loans currently stand at Sh10.2 billion, according to the latest data from HELB.