University education in Kenya is at a crossroads. The Higher Education Loans Board (HELB), once the backbone of student financing, is struggling to sustain itself, and the new university funding model introduced by the government is facing challenges. The situation raises an urgent question: what next for university funding in Kenya? To find solutions, it is essential to examine global best practices and consider how Kenya can adapt them to its unique circumstances.
For decades, HELB has provided loans to students, enabling them to access higher education regardless of their financial background. However, increasing demand for university education, high default rates, and a constrained national budget have made HELB financially unsustainable. Many graduates struggle to secure jobs, making loan repayment difficult.
Additionally, the low-interest rates charged on HELB loans do not generate enough revenue to sustain the fund. As a result, HELB has been forced to seek external funding and even consider private sector partnerships to remain operational.
In response to these challenges, the Kenyan government introduced a new university funding model in 2023. The model shifted from a uniform funding system to a needs-based and performance-based approach. Students were categorized into four levels—vulnerable, extremely needy, needy, and less needy—each receiving different levels of support through scholarships, loans, and household contributions. While the model was meant to ensure fairness and target funding to those who need it most, implementation has been rocky. Many students and parents have complained about delays in fund disbursement, lack of clarity on criteria for funding allocation, and insufficient financial support, leading to uncertainty in university education.
To find a sustainable way forward, Kenya can draw lessons from other countries that have successfully funded higher education. One approach is the income-contingent loan system, used in countries like Australia and the United Kingdom. Under this model, students receive government-backed loans but only start repaying once they earn a certain minimum income after graduation. The repayment is deducted as a percentage of their salary, ensuring that students are not burdened with loan repayments when they are unemployed or earning low wages. This system reduces default rates and ensures that student loans are repaid over time, making the funding model more sustainable.
Another option is the graduate tax model, which has been explored in countries such as the United States and Germany. In this system, university graduates pay an additional tax based on their income for a certain period after completing their studies. The tax revenue is then used to finance higher education for future students. Unlike traditional student loans, graduates do not carry individual debt burdens, and the funding is spread out across all graduates. However, this model may be challenging to implement in Kenya due to concerns about tax evasion and the already high tax burden on workers.
Some countries, such as Norway and Germany, have opted for a fully government-funded university education system. In these nations, higher education is treated as a public good, and tuition fees are either extremely low or completely free for students. Instead of relying on student loans, the government funds universities through tax revenues. While this model ensures equal access to education, it requires a strong economy and a high level of government commitment to education funding. Given Kenya’s budget constraints, fully free university education may not be immediately feasible, but the government can consider increasing direct funding to universities to reduce students’ financial burdens.
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Public-private partnerships (PPPs) also offer a viable solution. Countries like the United States have leveraged private sector involvement in university funding through corporate sponsorships, research grants, and endowment funds. Universities collaborate with businesses and industries to secure funding for scholarships, infrastructure, and research projects. In Kenya, strengthening partnerships between universities and the private sector can help bridge funding gaps and create opportunities for students through internships and job placements.
Another innovative approach is the work-study model, which has been successful in countries like the United States and Canada. In this system, students work part-time on campus or in industries related to their fields of study, earning income that helps cover their tuition and living expenses. Implementing a structured work-study program in Kenya could ease students’ financial burdens while equipping them with practical experience that enhances employability.
Kenya can also explore community-based university funding. Some countries, including South Korea, have implemented community scholarships where local governments, businesses, and philanthropists contribute to education funds that support students from their regions. This approach ensures that students from disadvantaged backgrounds receive financial assistance while fostering a sense of social responsibility and investment in local human capital.
As Kenya seeks a sustainable university funding model, a hybrid approach combining multiple strategies may be the best way forward. The government can strengthen HELB by increasing its funding base and implementing an income-contingent repayment system to reduce default rates. Universities can diversify revenue streams by collaborating with the private sector, offering market-driven courses, and enhancing research commercialization. Additionally, structured work-study programs and community scholarships can supplement student funding.
The future of university education in Kenya depends on bold reforms and innovative financing mechanisms. The government, universities, the private sector, and society must work together to create a system that ensures access, affordability, and sustainability. Education is the foundation of economic growth and social development, and investing in a sustainable funding model is essential for Kenya’s progress.
By Kamomonti wa Kiambati
