Ruto's varsity funding plan faces collapse

Cracks are beginning to emerge in President William Ruto’s much-touted university funding model, raising concerns that it could slide into the same troubles that plagued its predecessor.

It has now emerged that the new university funding model is coming under increasing strain, with deepening budget shortfalls raising questions about its sustainability barely three years after its rollout.

The student-centred funding model, introduced in 2023, was positioned as a long-term solution to the financial crisis that had pushed public universities into debt. 

The President has repeatedly assured that the model would stabilise institutions by aligning funding with students’ needs and ending the cycle of underfunding.

But three years on, it is increasingly facing familiar challenges, chief among them chronic underfunding.

Currently, 437,648 students are funded under the system, drawn from three cohorts — 122,634 students admitted in 2023, 134,889 in 2024, and 180,125 in 2025. 

A fourth cohort is expected later this year, further increasing the financial demand.

However, budget allocations have not kept pace with the rising student numbers.

Higher Education Principal Secretary Beatrice Inyangala on Wednesday revealed that the 2025-26 allocation remained at the same level as the previous financial year, despite the admission of the largest cohort yet.

The ministry required Sh29.55 billion to fully fund students under the model, but the allocation fell significantly short after an allocation of Sh16.92 billion.

This means the institutions are facing a funding gap of Sh12.63 billion, only 57 per cent of what the institutions require to fully fund the education of the students.

The funding constraints present a direct test to the model championed by President Ruto, as universities face the prospect of operating with shrinking resources despite rising enrolment.

With a fourth cohort set to join the system, the gap between available funding and actual need is expected to grow further, raising fresh concerns over whether the model can deliver on its promise of financial stability in the sector.

And now, PS Inyangala is pushing for an additional Sh1.5 billion to support scholarships, despite this only being a drop in the ocean of the outstanding deficit.

“When you add the supplementary amount of Sh1.5 billion, it increases the total scholarship allocation to Sh18.421 billion, raising coverage from 57 per cent to 62.25 per cent,” she said.

The shortfall marks a steady decline in funding levels since the model’s introduction.

In its first year, the government met 100 per cent of the required funding, building on the initial confidence alluded to by the President on the new system. 

But in the second year, disbursements dropped to about 64 per cent of the requirement before further falling to 57 per cent, this year,  the lowest level so far.

Figures from the Universities Fund show that in the 2024/2025 financial year, institutions required Sh26.57 billion but received only Sh16.92 billion, leaving a deficit of Sh9.63 billion. 

The gap has widened in the 2025-26 financial year, where the requirement rose to Sh29.55 billion but allocations remained unchanged, pushing the deficit to Sh12.63 billion.

Senior government officials attribute the decline to Parliament's stagnant budget allocations, even as the number of qualifying university students continues to grow each year.

Inyangala, while appearing before the National Assembly Education Committee, said the number of students joining universities has been growing since 2023, but the funding has remained the same.

“The budget allocation of 2025/2026 remained the same as the budget allocation for the previous year, 2024/25, despite the entry of a new cohort of 180,125 students,” the PS said.

The widening funding gap now places renewed pressure on universities, many of which are still struggling with debts accumulated under the DUC model. 

The trend mirrors the funding challenges that undermined the previous system, the Differentiated Unit Cost (DUC) model, which collapsed under sustained underfunding.

According to a document tabled in parliament, the current debt in public universities now stands at over Sh100 billion, with private universities accounting for about Sh60 billion.

Among the most indebted institutions are Egerton University, which carries the highest debt at Sh25.5 billion, followed by the University of Nairobi with Sh16.99 billion, the Technical University of Kenya with Sh14.13 billion, Kenyatta University at Sh12.79 billion, and Moi University with Sh10.38 billion.

PS Inyangala told MPs that 11 universities are technically insolvent, meaning their liabilities exceed the value of their assets. 

She warned that continued underfunding could push more institutions into insolvency.

“We previously had 22 technically insolvent institutions, but that number has now improved to 11. However, if underfunding persists, more universities risk falling into insolvency,” Inyangala said while presenting the Budget Supplementary Estimates I before Parliament.

Documents tabled before the committee show that a significant portion of the debt is tied to unpaid statutory deductions and other liabilities. 

Universities owe Sh26.34 billion in Pay As You Earn taxes, Sh108 million to the National Health Insurance Fund, Sh1.36 billion to the National Social Security Fund and Sh1.16 billion in Housing Levy deductions. 

They also owe Sh2.10 billion to banks, Sh18.63 billion in unremitted Sacco deductions, Sh4.17 billion to suppliers, and Sh4.69 billion to part-time lecturers. Other statutory deductions, including pension, gratuity and insurance, account for Sh33.21 billion.

However, some institutions have reported no outstanding debt. These include Karatina University, Alupe University College, Koitalel Samoei University College, Masinde Muliro University, Technical University of Mombasa, Tharaka University College and Embu University.

The debt crisis also extends to private universities, which are owed Sh60.28 billion by the government. 

According to Inyangala, private universities admitted government-sponsored students between 2016 and 2023 and expected to receive Sh77.24 billion in student funding. 

However, the government has only released Sh18.99 billion, leaving a substantial unpaid balance. 

The last cohort of these students is expected to complete their studies this year.

For Private universities, Mount Kenya University (MKU) faces the biggest debt, with Sh11.6 billion owed to the institutions.

KCA University comes second with the government owing Sh6.64 billion in debt, followed by Kabarak University third at Sh6.46 billion.

The government also owes Sh5 billion to the Kenya Methodist University (KEMU) and another Sh4.143 billion to the Catholic University of Eastern Africa (CUEA).