The High Court has barred Higher Education Loans Board from imposing fines that exceed the principal amount borrowed.
Justice Mabeya made the declaration on August 19 after a petition was filed by three former university students.
"A declaration that section 15(2) of the HELB Act is unconstitutional to the extent that it leads to interest rates and fines becoming more than the principal amount advanced," the judgment reads.
The students namely Anne Mugure, Davis Nguthu, and Wangui Wachira had sought the court's help to stop their loan fines.
Mugure who is a youth living with disability borrowed Sh82,980 in July 2004, as of July 2016 the loan had accumulated to Sh540,464.
"The 2nd petitioner, (Nguthu) borrowed Sh146,090 in Jul 2016, as of March 2021, the amount stood at Sh335,207."
"The 3rd petitioner (Wachira) borrowed Sh135,000 in July 2016, as at February 2021, the amount due stood at Sh336,573," the petition reads.
The former university students explained that HELB had violated the constitution and law.
They cited charging of interests, fees and penalties had increased the debt to more than double what they had borrowed.
"That by imposing a fine of not less than Sh5,000 in respect of each loan deduction that remains unpaid, section 15(2) of the HELB Act contravened the in duplum rule as it increased charges and interest," the report reads.
In response, HELB said Mugure had not made any effort to contact the board, informing them of the hardships and that Nguthu had only made three payments that is March, April and May 2018.
"That had the first petitioner informed the respondent that she was a youth living with disability, HELB would have thane that fact into consideration."
However, the board also noted that Wachira had not made any effort to repay the loan or explain hardship.
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