The government is set to overhaul how university education is financed, with Chairperson of the President’s Council of Economic Advisors David Ndii announcing that university funding will be removed from the national budget from October.
Speaking at an economic event, Ndii explained that the government plans to shift university financing to a market-based model. Under the proposed arrangement, the state would capitalise a dedicated fund over an extended period, after which the fund would raise additional financing from financial markets.
"We are going to take university funding out completely from October we are taking that out completely of the budget into a sort of market funding model where the government just capitalises the fund over a long period but the fund actually raises money from the market," Ndii stated.
The move would end the reliance on annual allocations from the national budget to finance university education. Instead, the proposed fund would seek additional resources from investors and financial markets.
The announcement comes weeks after President William Ruto unveiled plans to introduce full government funding for students admitted to universities from September 2026.
Under the proposed system, students would receive funding covering tuition and upkeep throughout their period of study, with repayment expected after they secure employment.
The arrangement would replace the current Variable Scholarship and Loan Funding model, which combines government scholarships, student loans and household contributions based on a student's assessed financial need.
The changes are contained in the Tertiary Education, Placement and Funding Bill, 2026, currently before Parliament.
The legislation also proposes merging the Higher Education Loans Board (HELB), Universities Fund and TVET Fund into a single institution, the Tertiary Education Funding Authority (TEFA).
TEFA would become the central agency responsible for financing students enrolled in public universities, colleges and TVET institutions.
The government has argued that the proposed authority would create a more unified and sustainable system for funding tertiary education by consolidating responsibilities currently handled by separate agencies.
The existing funding model, introduced in 2023, determines government support through means testing and combines scholarships, loans and contributions from households.
However, President Ruto has criticised the model, arguing that it failed to provide adequate support to both students and universities.
"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. After all, while we promised 80 per cent funding, we went down to 40 per cent," Ruto said.
The Tertiary Education, Placement and Funding Bill is awaiting parliamentary debate as the government seeks to secure approval before the planned September 2026 rollout of the new university funding system.
