- Universities have faced mounting debts while students continue struggling to meet the cost of their education.
- Alternative financing options include a training levy, education bonds and stronger private-sector participation.
- Improved HELB loan recovery could also help create a revolving pool to support future generations of students.
The government’s planned implementation of a new higher education funding model in September presents an opportunity to address longstanding financial challenges facing universities and students.
For more than a decade, universities have struggled with mounting debts and inadequate funding, while thousands of students have faced difficulties financing their education. Some institutions have come close to financial collapse, putting additional pressure on the country’s education system.
The proposed reforms are therefore a welcome step as the government seeks to create a funding system that is sustainable, scalable, fair and affordable.
One option is the establishment of a Higher Education Training Levy, with revenues ring-fenced specifically for higher education. Such a fund could provide universities with a more predictable source of financing, reduce their dependence on annual government allocations and enable institutions to plan for the long term.
However, policymakers must consider whether such a fund would have sufficient capacity to support future generations of students as demand for university and college education continues to grow.
Kenya could also explore the use of Unclaimed Financial Assets to strengthen the capital base of the Higher Education Loans Board (HELB), while fully protecting the legal rights of owners of those assets.
Putting otherwise idle funds to productive use could increase the resources available for student financing and reduce pressure on government borrowing.
Education bonds are another possible avenue. Through such instruments, the government could raise long-term financing specifically for higher education, attracting pension funds, institutional investors, Kenyans in the diaspora and individual citizens.
This approach would also reinforce the idea that education is not simply a government expenditure but a national investment with long-term economic returns.
The private sector could equally play a bigger role. Businesses benefit from skilled graduates entering the labour market and could therefore contribute through voluntary corporate education funds, employer-backed scholarships, tax incentives and public-private partnerships.
Stronger partnerships between commercial banks and HELB could further expand access to student financing. Government guarantees, lower-cost lending and shared-risk arrangements could encourage banks to provide additional resources without undermining the role of HELB.
Strengthening HELB loan recovery
At the same time, Kenya must improve recovery of existing HELB loans. Better tracking of graduates, stronger collection mechanisms and convenient digital repayment platforms would ensure that money lent to one generation of students can finance the education of another.
No single financing mechanism can solve the problem. Kenya could instead combine several of these approaches to create a diversified funding system that is less vulnerable to fluctuations in government budgets.
The case for such investment is strong. Higher education benefits society beyond the individual graduate. Skilled graduates pay taxes, establish businesses, develop innovations and provide the human capital required to drive economic growth.
The new funding model should therefore go beyond addressing the immediate financial crisis in universities. It should lay the foundation for a durable system capable of financing higher education for generations to come.
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Kenya now has an opportunity to fundamentally rethink how it pays for higher education—moving from short-term crisis management towards a sustainable national investment in human capital.
By Kithinji Njeru
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