In a seismic judgment that will reshape Kenya’s student loan landscape, the High Court has declared that the Higher Education Loans Board (HELB) has for years been operating outside the law — punishing the poor, discriminating against jobless graduates, and turning education loans into lifelong financial traps.
The case of Mugure & 2 Others v HELB now stands as one of the most consequential victories for Kenyan youth since the inception of government-backed university financing. For millions who have watched their loans balloon from a modest KSh 100,000 to impossible figures quadruple the principal, this ruling is nothing short of liberation.
For years, HELB has been accused of bleeding its beneficiaries dry through endless interest and punitive penalties. Graduates, many unemployed and struggling to survive, saw their debts grow uncontrollably — a system the court has now bluntly described as unconstitutional, discriminatory and illegal.
At the heart of the ruling is the in duplum rule, a principle under the Banking Act that caps interest and penalties at the value of the principal amount borrowed. If you borrowed KSh 100,000, total charges cannot exceed KSh 100,000. Banks obey this rule. HELB did not.
The petitioners — Anne Mugure, Davis Ng’uthu and Wangui Wachira — argued that HELB’s refusal to apply this rule amounted to discrimination against students from poor backgrounds. The court agreed emphatically.
The court noted the brutal reality facing young Kenyans: many graduate into unemployment, hustling for years before securing stable jobs. Rather than offering understanding or support, HELB buried them under multiplying penalties.
The judges affirmed something students have long felt:
HELB was punishing young people for being poor.
Worse still, HELB knew the in duplum rule applied — and admitted as much — but continued operating illegally, claiming it was “adjusting its systems.” The court dismissed this excuse: complying with the law is not optional.
Once a loan hits double the principal, interest must stop, and any amount beyond that is unrecoverable.
In a scathing assessment, the court ruled that HELB had violated:
Article 27 – Equality and freedom from discrimination
Article 43 – Socioeconomic rights (including education)
Article 46 – Consumer rights
HELB, a public institution meant to uplift students, had instead treated them worse than commercial banks, the judges noted — a tragic irony for an education support agency.
In one of its most far-reaching orders, the court declared Section 15(2) of the HELB Act unconstitutional to the extent that it allowed interest and penalties to exceed the principal amount.
This effectively rewrites HELB’s powers — and forces compliance with national banking standards.
The financial implications are staggering. HELB must now:
Audit and adjust loan balances
Remove all illegal charges exceeding the principal
Recalculate outstanding balances within the in duplum rule
Millions of graduates will now discover that the amounts they owe are far lower than HELB has been demanding. For some, the debt may already be cleared.
The judgment shines a harsh light on years of policy neglect. If profit-driven banks can obey lending laws, why was a government education fund allowed to act like a predatory lender?
The court has effectively thrown the issue back to Parliament, urging immediate reform of the HELB Act to prevent future abuse.
For young Kenyans navigating a brutal job market, this ruling is a lifeline. It recognizes the lived reality of economic hardship, joblessness, and financial exclusion. It re-centres constitutional rights and restores dignity to graduates who were made to feel like criminals for failing to repay impossible debts.
The court’s message is clear:
Government agencies are not above the law.
This ruling is more than a legal win. It is a moral reset — a reclaiming of justice for a generation that has long felt abandoned.
By forcing HELB to embrace fairness, transparency and proportionality, the High Court has done what successive governments failed to do:
protect Kenya’s students from financial exploitation.
As HELB begins dismantling its punitive system, millions of graduates can finally exhale — knowing the era of runaway interest and crushing penalties is over.
The law has spoken. And this time, it has spoken for the youth.
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