Dropouts, debts and court battles define universities in Ruto's era

President William Ruto’s administration is walking a tightrope over university funding, with the failure of the current financing system leaving institutions deep in debt and mass dropouts in universities and colleges amid plans to launch another model in September.

The proposed shift comes as public universities carry pending bills of Sh100.3 billion and the government faces a Sh57.65 billion gap between what the Higher Education Loans Board says it needs to finance students in the next financial year and what it has been allocated.

Ministry of Education data shows university student numbers have fallen this year from a record 680,768 in 2023/24 to 547,092 in 2024/25.

The decline of 133,676 students in one year has been attributed by the Ministry largely to the new funding and placement system, which it says has redirected some students towards Technical and Vocational Education and Training institutions.

The figures have put the government in a difficult position as it seeks to defend a new funding model while the system it introduced three years ago is still struggling to meet its financial obligations.

The proposed changes are contained in legislation now before Parliament, with the government seeking approval ahead of the September 2026 university intake.

Education Cabinet Secretary Julius Ogamba has urged MPs to fast-track the legislation, while President Ruto has said every eligible student admitted to a university or college should receive full government financial support.

The change would mark a major departure from the Student-Centred Funding Model, under which students receive a combination of scholarships, loans and household contributions based on their financial circumstances.

Under that system, the poorest students were entitled to the largest government scholarships, reducing the amount they would eventually have to repay after graduation.

The government is also facing the possibility that the proposed system could encounter legal challenges similar to those that disrupted the Student-Centred Funding Model.

The current model was challenged in court after its implementation, with the High Court in December 2024 declaring it unconstitutional on grounds that included discrimination and failure to adequately address the needs of students.

The government appealed the decision, and the Court of Appeal subsequently stayed the High Court orders pending determination of the appeal.

The legal battle created uncertainty over the financing of students and forced the government to defend a model that had already been presented as a major reform of university funding.

“The proposed system could therefore face scrutiny over whether its design complies with constitutional guarantees on access to education and equal treatment, particularly if scholarships are withdrawn for the majority of students and replaced with loans,” Ken Echesa a constitutional lawyer, argues.

Similarly, the proposed shift towards loans could also lead to an increase in the number of students shunning university admissions.

The concern comes against a backdrop of a sharp decline in university enrolment, with Ministry data showing student numbers falling by 133,676 in a single year from 680,768 in 2023/24 to 547,092 in 2024/25.

“The proposed model could deepen that pressure if students from low-income households become reluctant to take on large loans or find themselves unable to meet the costs that remain outside government financing. This would be particularly significant for students pursuing programmes that require several years of study, where tuition debt would accumulate alongside upkeep loans before a graduate has secured an income,” Boaz Waruku, Policy and Strategy Advisor for the Elimu Bora Working Group told the Standard.

MPs sitting at the Education Committee of the National Assembly also questioned if the funds under the new model will be available when students require them or if the model will be plagued by delays like the previous ones.

Currently, the student centred model has suffered a major setback with the government not able to provide the full funding required to fund the model.

To resolve this, HELB Chief Executive Geoffrey Monari said the initial three years would rely on bond financing before the system shifts to concessional loans.

He said the concessional loans  would carry interest rates of between one and three per cent and would be repayable over periods of between 30 and 40 years.

The proposed financing structure is therefore expected to move beyond the traditional dependence on the Exchequer.

The government plans to mobilise about Sh100 billion annually from government allocations, investors, parents, graduates and development partners, with education bonds forming the largest proposed source.

Mr Monari told MPs that the government would seek to ring-fence the annual Sh100 billion contribution so that the money is protected from budget cuts and treated as a first charge for higher education financing.

The proposed system would also introduce a voluntary education savings scheme under which parents could invest money for their children’s future university or TVET education.

The money would be invested by professional fund managers and later used to meet education costs, with the government presenting the arrangement as another way of reducing pressure on public financing.

The government also expects improved HELB recoveries, income-contingent repayments and concessional loans from development partners to provide additional resources.

The reforms would further consolidate the institutions responsible for financing higher education.

But that’s not all, questions also face the plan to clear the current pending bills in the institutions.

The institutions are also battling an accumulated debt amounting to Sh100.3 billion by January 31, 2026.

The liabilities include Sh33.21 billion in statutory deductions, Sh26.34 billion in unpaid salaries and wages, Sh18.63 billion in unremitted SACCO deductions, Sh4.69 billion owed to part-time lecturers and Sh4.17 billion owed to suppliers.