Education stakeholders are pushing for clearer rules on how tertiary education is financed in Kenya, including timely disbursement of funds and the scrapping of interest charged on student loans, as Parliament collects public views on a Bill that would overhaul the sector’s funding model.
The Muslim Education Council wants interest charges removed from the Tertiary Education Placement and Funding Bill, 2026, currently before the National Assembly’s Departmental Committee on Education, arguing that doing so would speed up loan repayments. The council wants Clause 45(d), which provides for interest on loans, and Clause 49(i), which deals with repayment timelines, deleted from the Bill entirely.
“Let the loanee repay the loan as taken and if there is an administrative charge that is known, that one is discussable,” council member Said Abdalla told the committee during a public participation session chaired by Mandera South MP Abdul Haro.
Undergraduate and TVET loans currently attract interest of 4 per cent per annum on the outstanding balance, on top of a Sh1,000 annual ledger fee, a cost the council argues falls hardest on students from low-income households who make up the bulk of loan applicants through the Higher Education Loans Board (HELB).
The scale of the repayment problem lends weight to that argument. As of June 2025, the number of defaulters stood at around 256,000; within five months, that figure had climbed by nearly 50 per cent to 380,530.
HELB Chief Executive Geoffrey Monari has separately put total defaults at Sh25 billion from more than 272,000 former students, while an Auditor-General’s report this year put the figure considerably higher, at Sh90 billion across 563,949 non-performing accounts, 77 per cent of all matured loans.
Monari has said recovered funds are critical to keeping the revolving loan scheme running for future students, while acknowledging that HELB has limited legal tools to compel repayment, since the loans are a civil rather than a criminal matter.
The Kenya Union of Post-Primary Education Teachers (Kuppet) raised a different concern, warning that the proposed funding system lacks a secure, ring-fenced source of revenue.
Kuppet Secretary-General Akello Misori told MPs this leaves the fund exposed to unpredictable annual allocations, with no guarantee that students partway through their studies would continue receiving funding through to completion.
“As such, there is no guarantee that continuing students will be funded to completion of their programme,” Misori said during the Nairobi hearing.
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The Elimu Bora Working Group (EBWG), hosted at the Kenya Human Rights Commission, pushed for a stronger commitment to full state funding altogether, covering tuition, accommodation, meals, learning materials, transport and other prescribed costs for every student admitted to an accredited public tertiary institution.
“Full funding means providing resources to meet the approved tuition, institutional, academic, accommodation, learning, transport, health, practical training, research, and other essential costs needed by a student in pursuing an approved programme for the full duration of the study,” EBWG representative Mohamed Farah told the committee, proposing that Clause 4 of the Bill be amended to create an enforceable mechanism guaranteeing that support.
The group also wants Clause 29 amended so that funding comes through a mix of grants, scholarships and loans rather than loans alone.
“The purpose of the fund shall be to provide full government funding to eligible students and trainees in the form of grants, scholarships, or loans according to the need and nature of the cost,” said Boaz Waruku, the group’s Policy and Strategy Advisor.
Mau Mau Children Post-Colonial Elites (MMV Associates CLG) took a broader view, urging Parliament to ensure all six education Bills currently before the committee keep education accessible, affordable, equitable, transparent and responsive to the country’s changing needs.
“The organisation particularly calls upon Parliament and the government to ensure implementation does not create additional barriers for children and young people from poor, marginalised, rural and historically disadvantaged communities,” said Emmah Kasis, the organisation’s Chief Executive Officer, arguing that “education should be treated as a national investment and a constitutional right, rather than merely an individual economic commodity.”
The Bill proposes establishing a Tertiary Education Funding Authority (TEFA) to take over functions currently split between HELB, the Universities Fund and the TVET Fund, and would shift the sector toward an all-loan funding model, replacing the current student-centred system that blends loans with scholarships.
Separately, the Bill has also drawn concern from Kiambu Senator Karungo wa Thang’wa, who has called for stronger safeguards on scholarships, clearer repayment terms and a cap on loan interest to protect students from poor households, and from youth groups including the People’s Party of Kenya’s youth wing, which has criticised a proposal requiring graduates to have 25 per cent of their salary deducted monthly toward loan repayment.
The National Assembly’s Departmental Committee on Education began nationwide public participation on the Bill, and five other education reform Bills, on September 14, with the deadline for written memoranda extended to Friday, October 2, 2026.
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