University funding model dilemma sparks fear of cash crunch

Students who sat their Form Four examinations last year face uncertainty on when to join universities.

The government was hanging on the hope that the Court of Appeal would grant permission to proceed with the new university funding model.

“The intake for universities is set for September, and we believe that once we get a ruling on Monday, we will be able to prepare and ensure students will be in university in good time,” Kenya University and Colleges Central Placement Service (KUCCPS) Chief Executive Mercy Wahome last week told the Education Committee of the National Assembly.

But the hope for a way forward was dimmed on Monday after the court denied the government a stay order.

Introduced in September, 2023, the model sought to allocate funding based on students’ levels of financial need rather than a flat-rate government sponsorship.

Last year, the High Court declared the model unconstitutional, prompting the Universities Fund and the Higher Education Loans Board to appeal the ruling by Justice Chacha Mwita.

The decision has made uncertain the selection and admission of nearly 250,000 students who sat the 2024 KCSE and managed a university entry grade of C+ and above.

Ordinarily, during the release of the results, the Education CS directs KUCCPS to commence placement. Universities declare their available slots, students apply and the placement service matches them based on merit and preferences.

This year, however, the placement portal remains closed, universities are unsure of their capacity, and students have no idea how they will finance their education, seven weeks after the release of the Form Four examination results.

“The judgment that nullified the new funding model did not provide clear guidelines on how to handle students who had been placed in the last two years or how to proceed with future placements,” said Dr Wahome.

The government, seemingly unprepared for the legal setback, has no alternative plan in place. 

KUCCPS has kept the system open for students enrolling in Technical and Vocational Education and Training institutions, including those joining the Kenya Medical Training College.

Beyond the students, the universities, already struggling with underfunding, are now uncertain about how many students they can admit and how much funding they will receive.

Traditionally, the Differentiated Unit Cost (DUC) model guided funding, where the government provided financial support based on the cost of specific courses. 

“If we go back to DUC, then we have to start thinking about cut-off points again because we simply do not have the capacity to fund all 246,000 students under government sponsorship,” said Prof Daniel Mugendi, the chairman of the Vice Chancellor’s Committee.

Meanwhile, university debts have dropped from Sh75 billion to Sh72 billion, due to the new funding model, according to Universities Fund.

The revelation comes as experts and stakeholders converge for the Second Biennial Kenya Universities Funding Conference in Naivasha today.

Fund CEO, Geoffrey Monari, expressed fears the debts could rise again following the court's directives. Monari spoke at the Lake Naivasha Resort ahead of the conference.

Monari said the government has in the last two years used Sh44 billion to cater for 247,000 students through loans and scholarships.

"We urge students affected by the suspension of the implementation of new funding by the courts to practice patience as the government puts in measures that will ensure that they pursue their studies," he said.

The conference, which will be chaired by Education CS Julius Ogamba, aims to unlock challenges facing the sector.

Themed "Navigating the New Era of Higher Education Financing in Kenya", the conference will convene over 250 participants, including university managers, government policymakers, private sector stakeholders and development organisations to address the evolving financial landscape.

“The conference will explore progress on funding reforms and alternative financing models, strategies for enhancing excellence in research, teaching, and community outreach, particularly within global university rankings, and leveraging digital innovations to streamline university operations,” a concept note reads.