Kenya is considering a major overhaul of how students finance university and other tertiary education, with a proposed law seeking to replace the Higher Education Loans Board (HELB) with a new authority responsible for loans, scholarships, placement and education savings.
The Tertiary Education Placement and Funding Bill, 2026, currently before Parliament, proposes changes that would affect students, parents, employers and graduates if enacted.
One of the biggest changes is the proposed creation of the Tertiary Education Funding Authority, which would take over key functions currently performed by HELB.
The proposed system would also allow parents and guardians to save through a government-backed education savings scheme for their children’s future tertiary education.
Here is what the proposed changes mean.
Why is HELB being replaced?
Under the Bill, the Tertiary Education Funding Authority would take over the functions of HELB in managing student loans and other forms of tertiary education funding.
The new authority would process student funding applications, issue loans and scholarships, recover loans and oversee other financing programmes.
It would also have powers to establish a savings scheme through which parents or other individuals could deposit money specifically for a child’s tertiary education.
The Bill states that the authority may establish a savings scheme or product “to receive deposits from any person for the purpose of saving towards tertiary education in respect of a specific child.”
However, the legislation does not provide detailed information on how the proposed savings scheme would operate, including its contribution limits, returns or withdrawal conditions.
Will students still receive government funding?
Yes, but the proposed model would change how that funding is structured.
The Bill proposes a system in which students can apply for loans to finance their tertiary education.
President William Ruto has argued that the government should move away from the current differentiated funding approach and towards a universal system that ensures students are not denied courses because their families cannot meet household contributions.
“We are moving to universal,” Ruto said while urging Parliament to fast-track the proposed changes.
He argued that the previous funding model had created difficulties for universities and families.
“We tried the differentiated model; I think the vice-chancellors here know, it didn’t work because it made most of our universities almost close down,” the President said.
The proposed changes are therefore intended to ensure that students who qualify for higher education can access financing regardless of their families’ ability to make upfront contributions.
How would student loans be repaid?
The proposed law sets out specific repayment obligations for graduates.
A beneficiary would be required to begin repaying their loan one year after completing their studies.
For graduates who secure formal employment, the loan repayment would be linked to their employment.
Students would be required to inform their employers that they have an outstanding education loan, allowing deductions to be made from their earnings.
Employers would then be required to send the deducted amounts to the new authority by the ninth day of every month.
The Bill proposes a penalty for employers who deduct money from workers’ salaries but fail to remit it on time.
An employer would face a charge equivalent to 5 per cent of the outstanding repayment for every month, or part of a month, that the money remains unpaid.
What happens if a graduate is self-employed?
The proposed system also provides for graduates working in the informal sector.
Instead of relying on an employer to make deductions, a borrower would enter into a payment arrangement with the authority.
The agreement would determine how frequently and through which method the graduate makes repayments.
The Bill also proposes a limit on deductions from a borrower’s earnings.
The authority would not be allowed to deduct more than 25 per cent of a loanee’s emoluments towards loan repayment.
This provision could be significant for graduates whose income varies from month to month.
Can parents save for their children’s university education?
The proposed law would introduce a new option for parents and guardians.
The Tertiary Education Funding Authority would have powers to establish an education savings scheme where individuals could deposit money for a specific child’s future tertiary education.
The proposal would effectively create another route through which families could prepare for university costs before their children reach tertiary education.
However, the Bill does not yet explain key details such as how the savings would be invested, whether the funds would earn returns, when withdrawals would be permitted or whether the government would contribute to the accounts.
Those details would likely have to be addressed through regulations or subsequent policy decisions.
Who will place students in universities?
The Kenya Universities and Colleges Central Placement Service (KUCCPS) would continue playing a central role in determining where students are placed.
Under the proposed framework, KUCCPS would coordinate placement into universities and other tertiary institutions.
The agency would also be responsible for developing a framework for student and trainee placement.
Beyond placement, KUCCPS would provide coordinated career guidance to people intending to pursue tertiary education.
It would also advise the Cabinet Secretary on matters relating to students and trainees.
What happens to current HELB borrowers?
The proposed legislation would transfer student funding and loan recovery responsibilities to the new authority.
However, the practical transition arrangements for existing HELB borrowers would be important.
The government and Parliament would need to clarify how existing loans, repayment records, employer deductions and outstanding balances would be transferred to the new institution.
This means current HELB beneficiaries should pay attention to the final law and regulations before assuming that their existing repayment obligations will change automatically.
Why is the government pushing the changes now?
The proposed reforms come as the government seeks to change the way university funding is distributed.
President Ruto has said the goal is to create a system where students can pursue courses for which they qualify without being blocked by their families’ inability to pay a household contribution.
“I want to implore Parliament to expedite amendments to the Higher Education Loans Board so that beginning September we can make sure that any child who qualifies for medicine does not fail to study medicine because their parents cannot afford to pay the household contribution,” he said.
The Bill has now been tabled in the National Assembly and will have to go through the parliamentary process before becoming law.
What happens next?
The proposed changes are not yet law.
Parliament must debate the Bill, consider amendments and pass it before it can proceed through the remaining stages of the legislative process.
If enacted, the government would then need to establish the new authority and develop the regulations required to implement the funding, savings, placement and loan-recovery systems.
For students and parents, the biggest question will be how the final system balances access to education with the burden of taking on debt.
For graduates, the key issue will be how repayments are calculated and collected once the new authority takes over from HELB.
The proposed law could therefore fundamentally change how Kenyans pay for tertiary education — from the moment a student receives a university placement to the point at which they finish repaying their education loan.
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