Hey Cyprian,
Just as a follow up on your post on HELB. I looked at the act that created the HELB and surprise surprise: HELB is clearly contravening the act and engaging in pretty much daylight robbery. I reckon we need to have a lawyer look at these points and see if we can sue HELB. HELB presently harbours the following extremely disturbing shortcomings:
- HELB loans are ballooning to elephantine proportions. The only way that a loan can balloon to such size is if HELB charges illegal fees and an illegally high-interest rate above the agreed 4% annual rate prescribed in the Higher Education Loans Board Act of 1995.
- HELB does not provide evidence of how it arrives at this illegal and exorbitant interest rate that it cleverly dresses as a penalty.
- HELB also charges a new illegal interest rate of Kshs 5000 a month. This rate is significantly higher than the market rate for even a high risk loan and is not a fair reflection of any changes in the underlying risk. The HELB “monthly 5000 penalty” is not justified on any proper commercial grounds.
- At the time of applying for the loans, most of us were either teenagers or just past. We were not financially sophisticated and totally relied on the application instructions from HELB.
- HELB Information on a fine is vague, unclear and inaccurate. Here again, HELB switches the words “a fine” with “penalty”, a more loaded word that does not appear in the Higher Education Loans Board Act, 1995.
- HELB has a fiduciary duty to clearly and accurately state the implications of its fine to its
unsophisticated customers who in some cases are teenage students. Implications of the fine are not implicitly stated, explicitly stated or otherwise.
- The Higher Education Loans Board Act, 1995 states that “Obligations of the loanees” are to among other things “begin repayment of his loan together with any interest accrued thereon”. It goes further that “Any loanee who fails or neglects to satisfy the requirements of subsection (1) within the stipulated time shall, in addition to any other action that the Board may take against him”
- i)
However, it is my position that the phrase “in addition to any other action that the
Board may take against him” is not a carte blanche to impose an illegally high-interest rate dressed as a “monthly penalty”. The above phrase refers to actions already specified in the Higher Education Loans
Board Act, 1995 which states that “If in the opinion of the Board there has been or is
likely to be any breach of or failure to comply with any condition or term of repayment
respecting a loan the Board may forthwith— (a) recover from the person from whom
the loan was made or his personal representative as a civil debt under the Debts
(Summary Recovery) Act (Cap. 42) the amount of the loan or the amount thereof
then remaining unpaid together with interest thereon ;(b) enforce or realize any
security relating thereto” - ii)
It is important to note that there is no mention of the words “monthly penalty” here.
iii)
What is to be recovered from the loanee is very clearly stated here as “the amount
of the loan or the amount thereof then remaining unpaid together with interest
thereon”.
- Further, the section on Conditions for grant of loan in the Higher Education Loans
Board Act, 1995 states that “The Board may demand security and require repayment
in instalments at such times and within such periods as the Board deems fit”.
It is my position that this is a vague, unclear and inaccurate statement as it does
not specify whether the period of instalments is daily, weekly, monthly or otherwise.
- Nowhere in the Higher Education Loans Board Act, 1995 does it state that this so
called “penalty” is monthly. That word “monthly” does not appear in the Higher
Education Loans Board Act, 1995 act and is therefore illegal. The word that appears in
the act is “instalments” and not the “Monthly” word that was egregiously injected into HELB loan demands.
- A HELB agreed loan had a guarantor, a form of insurance or security for the loan, as the
Higher Education Loans Board Act, 1995 states “Where in granting a higher
education loan to any student the Board considers it prudent to request for a
guarantor to guarantee any loan granted to a student, in case of any default by the
loanee in the repayment of the loan any guarantor who has guaranteed any such
loan, shall automatically and fully be liable to pay to the Board all or any loan
together with interest accrued and outstanding…”.
Therefore, it is my position that the automatic response and first port of call of HELB
must be the guarantor as prescribed in the act. It seems to me, however that since this isn’t as lucrative as gouging students with illegally high interest rates, HELB decided on these illegally high interest rates.
- The Higher Education Loans Board Act, 1995 provided for “the establishment of a
Board for the management of a Fund to be used for granting loans to assist Kenyan
students. - It is my position that HELB is NOT assisting students but fleecing them instead. This contravenes the Higher Education Loans Board Act, 1995 because the word assist is defined in the Oxford dictionary as “to help or to support”.
- Student loans typically have low interest rates, even by dictionary
definition. So for HELB to illegally vary the interest rate and mask it as a “monthly
penalty” is preposterous and illegal. - In the Higher Education Loans Board Act, 1995 under the section titled Revenue and expenditure of the Fund it states “There shall be credited to the Fund ……
(b) sums which represent the repayment of the capital and interest of any loan
granted..”.
It is my position therefore that it was not envisaged in the act that HELB would impose the so called “monthly penalty” as a revenue stream. This further underscores the illegality of this “monthly penalty”.
- It is my view that HELB is a financial institution that engages in deceptive bait and switch practices and, must be barred from imposing exorbitant, abusive, deceptive and illegally
high interest rates however cleverly masked they are.
- If HELB is allowed to illegally inject words and alter the terms stipulated in the
Higher Education Loans Board Act, 1995 act then what stops it from going rogue and
colluding with the so called debt collectors to further rob gullible students?
- HELB has nefariously morphed into predatory lending and its products should be labelled as such because they differ massively from what is stipulated and specified in the Higher Education Loans BoardAct,1995.
Finally about a year ago, maybe more, President Uhuru Kenyatta wrote off debts of coffee farmers and prior his administration wrote off a 40 billion debt to sugar millers, why can’t the same President Kenyatta write off the diabolical HELB loans. In any case, the loans keep accumulating since the economy just isn’t absorbing any new employees. Also, can you start a campaign to have a class action lawsuit against HELB? The whole idea behind a student loan is that one pays it when they start working. It is silly to penalise loanees who are yet to start work. In my opinion, a typical HELB loanee would be if unshackled would be more productive that typical farmers.
Regards,
L.A.
Cyprian Nyakundi is a Kenyan-based blogger who has an interest in politics, governance, corporate-fraud and human-interest stories. Kindly drop me a note if you feel aggrieved on any matter that you would want to be highlighted. WhatsApp: +254710280973 Email : [email protected], or [email protected], [email protected]
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