Varsity students to shift to new loan-based funding model

All university students will move to a loan-based funding model, ending President William Ruto’s three-year student-centred financing system.

Education Cabinet Secretary Julius Ogamba said the transition will take place once Parliament passes the Tertiary Education Placement and Funding Bill, 2026, which is expected to establish the legal framework for the new system.

The Tertiary Education Placement and Funding Bill, 2026, has already gone through its First Reading in Parliament and is expected to proceed to the Second Reading when Parliament resumes.

Ogamba said transitional mechanisms would be implemented once the Bill becomes law.

“What we are doing is that because it’s not law yet, we can’t use it. But we have an existing model which we can use to meet the first-year students, but once it becomes law, we will transition all the students to the new model,” Ogamba said.

The CS said the transition would not be limited to new students joining institutions this year, but would cover the entire tertiary education system.

“All university students, TVET students, KMTC students, TTC students, will be funded under that model,” he said.

At the same time, the Ministry of Education has extended the application deadline for university funding for first-year students to September 21.

This comes as 195,000 first-year students applied for funding by the lapse of the August 31 deadline.

Another 769,422 applications for continuing students had been received by August 31, when the initial application window closed.

“Recognising that some eligible students and trainees may not have met the initial deadline on account of various causes, the universities, funds and the Higher Education Loans Board have been directed to extend the application window for all eligible students to the 21st of September 2026,” Ogamba said.

The extension applies to eligible university students and TVET trainees.

The CS also announced that they have released Sh22.12 billion for continuing university students and TVET trainees for the first semester.

Ogamba said the funds had already been disbursed for the ongoing students, while funding for first-year students would be processed and released once their applications and admissions were confirmed.

The student-centred funding model was introduced by the Kenya Kwanza administration as a response to persistent financial challenges facing public universities, which have accumulated billions of shillings in debt and struggled with inadequate government capitation.

Under the proposed framework, students are expected to access financing through scholarships and loans, based on the cost of their programmes and level of need.

However, the new plan to replace the model with loans has raised concern over the possible debt burden on students upon graduation.

But Ogamba defended the proposed approach, saying the issue of student debt should be considered against the cost of training and the earning potential of graduates after completing their studies.

“We have a programme where we want to increase our numbers. Currently it is about 580,000. We gave them money; it was 287,000 to about 780,000. Our target was to reach two million,” Ogamba said.

He said enrolment had been affected by the cost of training, with the fee currently standing at about Sh67,150.

Under the proposed funding model, the Government would finance that cost, allowing more students to access training while shifting repayment to a later period.

“Once the student finishes the course and works for one year, they start paying after one year for 10 years,” Ogamba said.

The CS argued that the repayment burden would therefore need to be assessed against the opportunity created by accessing education and subsequently securing employment.

Ogamba said the same principle would apply to university programmes, although the amount borrowed would vary depending on the course.

He cited medicine as an example of a programme with a higher training cost but said graduates in the profession also have greater earning potential.

“The burden that we are talking about must be looked at vis-à-vis what the cost is,” he said.

The Government’s position is that students would not be required to begin repayment immediately after graduation, with repayment expected only after they have entered employment or begun practising their profession.

Ogamba acknowledged concerns about the ability of students to repay their loans, saying mechanisms would be put in place under the new model.

He said the current repayment performance of loans was about 70 per cent, adding that the Government expected the figure to improve under the new framework.

“We are clear that when we put the mechanisms in place in the new model, that figure can go up to a different percentage.”