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Punitive penalties won't work for Helb – Business Daily

Students at Helb offices in Nairobi. FILE PHOTO | NMG
The Higher Education Loans Board (Helb) has been stopped by the High Court from imposing interests and fines that exceed the principal amount borrowed by students.
Imposing such exorbitant interests and penalties was one of the board’s ways of ensuring that the borrowers repay promptly.
The court judgment will therefore add to the student loans body’s financing headache. But Helb also needs to appreciate the fact that in an economy where jobs are hard to get, beneficiaries of its loans are bound to default.
The punitive penalties would work where graduates are employed but do not want to honour their side of the bargain by remitting the loans as required.
Understandably, Helb needs to collect sufficient funds to be able to meet its obligations of lending to the many students whose parents are not capable of paying the high fees required for university education.
However, the board should be more ingenious in meeting its objective than resorting to the easy route of imposing punitive penalties. For its part, the Treasury should release funds to this critical institution on time.



Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.