How govt plans to overhaul student placement and loans replacing HELB with new authority

Kenya is set to overhaul how students are placed in universities and colleges and how tertiary education is financed under a proposed law that would replace the Higher Education Loans Board (HELB) with a new body responsible for loans, scholarships and other forms of financial support, sails through Parliament.

The Tertiary Education, Placement and Funding Bill, 2026, sponsored by National Assembly Majority Leader Kimani Ichung’wah, proposes to repeal the existing HELB law and establish the Tertiary Education Funding Authority as the main institution responsible for financing students and trainees in tertiary institutions.

The proposed system would also retain a central placement body, the Kenya Universities and Colleges Central Placement Service (KUCCPS), while linking placement directly to access to government-backed education funding.

If the Bill becomes law, the changes would affect students, parents, graduates, employers and institutions.

Under the Bill, the proposed Tertiary Education Funding Authority would take over the functions currently performed separately by HELB, the Universities Fund Board and the Technical and Vocational Education and Training Funding Board.

The Bill expressly provides that the new Authority would be the successor to the three institutions.

It also proposes to repeal the Higher Education Loans Board Act (Cap. 213).

However, the transition would not wipe out existing student loans. The Bill provides for the transfer of the rights, obligations, assets and liabilities of the existing institutions to the new entities.

Existing loans would therefore continue under the proposed Authority, while current employees of the affected bodies would also be transferred to the successor institutions.

For a student or graduate who already has a HELB loan, the proposal therefore envisages a change in the institution collecting and administering the loan rather than cancellation of the debt.

The proposed system would broaden the institutions covered by the loan framework.

“Every student or trainee admitted into public or private tertiary institution shall be eligible for an education loan,” Clause 46(1) provides.

Eligibility, however, would not mean an automatic loan award.

The Bill requires an applicant to be a Kenyan citizen, meet the applicable entry requirements and have been admitted to a recognised tertiary institution.

The Authority would then assess applications against funding criteria that it would establish in consultation with the Cabinet Secretary.

The Bill also specifically provides for loans benefiting minors.

Under Clause 47, an eligible person could apply for an education loan on behalf of a minor who has been admitted to a tertiary institution.

The Bill would give KUCCPS a central role in determining where students enter the tertiary education system.

Public tertiary institutions would be required to submit details of their programs, available capacity and approved program costs to KUCCPS.

The Service would then publish the information and conduct placement.

The proposed law gives priority to public institutions. A student could be placed in a private institution upon request where there is no vacancy for the particular program in a public institution.

More importantly, the Bill links placement to funding.

Clause 20(5) provides:

“Funding under this Act shall only be for students who have been placed by the Placement Service.”

This means that under the proposed framework, placement and financing would operate as connected parts of the same system.

The proposed Authority would not rely solely on annual government allocations to finance tertiary education.

The Bill gives it powers to mobilise resources from a range of sources, including Treasury bills and government bonds, domestic pension funds, collective investment schemes, sovereign wealth funds and climate finance.

Also, the Authority would be able to establish a tertiary education savings scheme or product through which individuals could save towards the future education of a specific child.

Other proposed sources of money include loan repayments, interest, government grants, appropriations by the National Assembly, donations and income from investments.

The Bill also proposes a formal salary-based system for recovering student loans.

Repayment would begin within one year after completion of studies, with the borrower required to repay the loan together with applicable interest and charges.

Once employed, a loanee would be required to disclose their loan status to the employer. Employers would then be required to make deductions and remit them to the Authority.

There would, however, be a ceiling on the amount that could be deducted.

“In making deductions for loan repayment, the Authority shall deduct not more than twenty five percent of the loanee's emoluments,” Clause 49(4) provides.

Employers would have nine days after the end of each month to remit the deductions.

Failure to remit the money would attract a penalty of 5 per cent of the unpaid amount for every month it remains outstanding.

The proposed Authority would also have powers to enter and inspect business premises and employers for compliance with the loan recovery provisions.

For self-employed borrowers, the Bill proposes a different arrangement, requiring them to enter into a payment plan with the Authority.

The Bill proposes to give the new Authority extensive powers to recover outstanding loans.

Amounts owed would be recoverable as civil debts, while the Bill also proposes amendments intended to ensure that proceedings for recovery of education loans do not become time-barred.

The proposed framework does not, however, set out a specific interest rate for the loans.

Instead, the Authority would have the power to set the interest rate in consultation with the Cabinet Secretary.

Similarly, the Bill does not establish a detailed formula showing how an applicant would be assessed for a loan, scholarship or other form of assistance.

It provides for the Authority to establish funding criteria.