Kenya’s higher education sector is staring at a period of uncertainty as the government rolls out the 2026/27 budget allocation of Ksh160.09 billion under the new student-centred funding model.
While attention has largely focused on students and parents, universities themselves could be the next institutions to feel the financial squeeze.
Of the total allocation, Ksh 29.4 billion has been set aside for scholarships and Ksh 67 billion for student loans. The remaining funds will support institutional operations and other higher education needs.
However, sector insiders warn that delayed disbursements and accumulated arrears could significantly disrupt cash flow in public universities.
Several universities are already grappling with historical debts, pending supplier payments and salary pressures. If a substantial portion of the new allocation is used to clear previous obligations, institutions may struggle to fund current operations, including laboratory upgrades, research activities and maintenance of facilities.
The vice chancellors have previously expressed concern that the student-centred model shifts financial risk from government to institutions.
Under the framework, universities depend heavily on timely loan and scholarship disbursements tied to individual students. Any delays directly affect their revenue streams.
The new funding bands, designed to categorize students according to household need, have also introduced unpredictability. Universities cannot accurately forecast revenue until student assessments are finalized and funds are released. This makes planning for staffing, infrastructure expansion and academic programmes increasingly complex.
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Private universities, meanwhile, may see an unexpected opportunity. With some institutions offering competitive tuition rates and more flexible payment plans, they could attract students seeking stability and predictable fee structures.
Education analysts say this may gradually alter enrolment patterns, particularly if public universities continue to experience funding uncertainties.
Another emerging concern is completion rates. Universities maintain strict policies on fee clearance before graduation. If funding gaps persist or families are unable to bridge shortfalls, students risk deferring studies or accumulating arrears that delay their academic progress. Such outcomes would not only affect individual learners but also institutional performance metrics.
Stakeholders argue that while the new model aims to enhance equity and target resources more efficiently, its implementation phase requires stronger safeguards. Clear timelines for disbursement, transparency in band allocation, and a structured plan to address backlogs could ease pressure on campuses.
As the 2026/27 academic year approaches, universities are adjusting budgets cautiously, aware that financial stability will depend not just on allocation figures but on the efficiency and consistency of fund release.
The coming months will reveal whether the new funding structure strengthens higher education sustainability or deepens the fiscal strain already facing Kenya’s universities.
By Kithinji Njeru
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