MPs push changes to university funding formula in new varsity bill

A proposal to overhaul Kenya’s university funding system has sparked fresh debate in Parliament, with MPs seeking changes to a bill that would fundamentally alter how government-sponsored students are financed.

The Tertiary Education Placement and Funding Bill, 2026 proposes a major shift from the current funding arrangement, where students may receive a mix of scholarships, HELB loans, and family contributions depending on their financial circumstances.

Under the new proposal, students admitted to public universities through the government sponsorship programme would receive their state support through a loan-based arrangement, with repayment expected after they begin earning an income.

The bill is being reviewed by the National Assembly’s Education Committee, and legislators are expected to propose amendments before it is debated in the House.

MPs have raised questions about the impact the changes could have on students from low-income households, particularly if grants are removed from the funding structure. They are also seeking clarity on repayment terms, income assessment, and the safeguards that would be put in place for vulnerable learners.

The legislation seeks to establish a Tertiary Education Funding Authority (TEFA) that would bring together the management of funding for universities, TVET institutions, bursaries, scholarships, and student loans.

According to the Ministry of Education, the proposed authority would use a centralised digital database to manage beneficiary records and coordinate funding decisions across the tertiary education sector.

Officials say the reforms are intended to make funding more accessible, sufficient, sustainable, and predictable for institutions and students.

The bill proposes that graduates who secure formal employment would have their loan repayments deducted through payroll systems.

For beneficiaries working outside formal employment, the proposal would require them to agree on a repayment plan with the relevant loans authority, including the method and schedule of repayment.

The draft law also seeks to limit deductions from a borrower’s income to no more than a quarter of their earnings.

In addition to restructuring student financing, the proposal includes measures aimed at expanding the resources available for higher education.

Among the ideas being considered are education bonds, savings products for parents planning for university education, borrowing from development partners on concessional terms, and other investment-based financing options.

The government believes these measures could reduce pressure on the Exchequer and provide a larger pool of funds for universities and colleges.

The debate comes as Parliament has set aside Sh56.7 billion for higher education support in the current budget cycle, with allocations for both universities and TVET scholarships.