TERMS ARE UNCONSTITUTIONAL

Former students sue Helb for prohibitive loan interest, fines

Mugure, Nguthu and Wachira say high charges make repayment difficult given the rate of unemployment in the country.

In Summary

• Mugure had borrowed a total of Sh82,980 by July 2004 and the amount due in July 2016 was Sh540,464.

• Wachira, for her part, had borrowed Sh135,000 by July 2016 and by February 2021, the amount had risen to Sh336,573.

University of Nairobi students protest over Helb.
University of Nairobi students protest over Helb.
Image: FILE

Three former university students want the Higher Education Loans Board compelled to stop huge interest and penalties on non-performing loans.

Anne Mugure, Davis Nguthu and Wangui Wachira claim that actions by Helb to impose exorbitant interest and fines on beneficiaries offend the Constitution.

Through lawyer Mokua Manyara, they claim that on or about November 19, 2020, Helb, through its Twitter handle @HELBpage, threatened to publish names and photos in leading newspapers of loan defaulters since 1975 by giving defaulter a 30-day notice to repay the money owed.

They say there have been many complaints by beneficiaries about exorbitant interest and penalties, which make repayment difficult given the rate of unemployment in the country.

Mugure had borrowed a total of Sh82,980 by July 2004 and the amount due in July 2016 was Sh540,464. Nguthu had borrowed Sh146,090 by July 2016. The amount had risen to Sh335,207 as of March 1, 2021. Wachira, for her part, had borrowed Sh135,000 by July 2016 and by February 2021, the amount had risen to Sh336,573.

They contend that Helb terms are offensive to Article 46(1) (c) of the Constitution, which provides that consumers have, among other things, the right to the protection of their economic interests.

“The actions of the respondents to impose exorbitant interest rates and penalties on beneficiaries of its accounts offend the Constitution, which requires the state to put in place affirmative action programmes that provide special opportunities in education and economic fields and providing opportunities for access to employment,” the documents read.

The three want a declaration issued against Helb that by imposing interest and penalties that exceed the principal amount, it is violating the Constitution.

“A declaration that Section 15(2) of the Helb Act is unconstitutional to the extent that it leads to interest rates and charges becoming equal or more than the principal amounts."