As university shutdowns loom, students face funding cuts

Kenya is looking to lock students from wealthy families out of state-funded university learning in a bid to reduce the unbearable burden of subsidised education.

The Universities Funding Board (UFB) – the agency that allocates university funding on behalf of the government – says that it will conduct an audit on all new and existing students to ensure that only those from needy backgrounds access state funding.

This conservative approach will also be extended to the Higher Education Loans Board, the agency that disburses state loans to students, meaning that the facilities will not be accessible to rich students.

The new model is largely meant to help slash state subsidies at a time when the government is struggling to fund its obligations – the result of a harsh economic environment and pressing loan repayments.

Who needs financial support to study?

University administrators have been seeking to raise tuition fees to meet their costs in the wake of reduced government allocations.

However, this plan has faced stiff opposition due to its direct impact on households which will be forced to dig deeper into their pockets.

The review of the funding model will see those excluded from state funds cater for their own learning fees, a turn of events which could save the government a quarter of the current expenditure on universities.

“This policy recommends a gradual introduction of targeted free tuition to shift the burden of higher education funding to only needy and bright students.

“Evidence has shown that a number of households in Kenya, especially those in the middle and upper income quotients, may not require any financial support to put their children through university education,” said the UFB in a brief to the Cabinet Secretary for Education, Ezekiel Machogu, published in late October. Machogu replaced Professor George Magoha following the August elections in Kenya.

Facing a perfect storm

Public universities rely largely on government subsidies to run their operations. Currently, the government is expected to cater for up to 80% of the cost of degrees per student for all those who are enrolled in the regular stream (government-sponsored), irrespective of their income status.

Students who meet the entry criteria to study at university (C+ grade in their school exit exam) receive sponsorship that covers tuition fees, save for admin fees of about US$160 per year. These students are admitted to public universities.

Those who miss the cut-off grade join the self-sponsored programme where you pay for your tuition. Others join private institutions.

The government capitation currently covers only 57% of the budget with the allocation mainly utilised to pay staff salaries, leaving little or no funding for promoting quality.

“Our universities are facing a perfect storm; lower state funding, reduced enrolment of self-sponsored students and unresolved mismanagement issues that have now hit crisis levels,” said Rufus Mwanyasi, the managing director at Canaan Capital, a financial consulting firm.

The review will also affect government-sponsored students in private universities who currently receive up to US$700 each year from the government. Funding to this cohort, said the UFB, will be completely discontinued.

As a result of the admission backlog, the government had started sending regular students who meet the eligibility criteria for government funding, to private universities. It pays for their tuition, which is higher than in the public sector.

A ‘disruptive’ proposal

The proposed model has been supported by Kenya’s National Treasury and vice-chancellors from public universities, who argue that this would help cut the universities’ overreliance on state funding as the main source of revenue.

Education experts believe that the funding reforms will go a long way towards resolving the funding challenges, although the problem will not be eliminated entirely.

“We are talking of a very disruptive proposal which will affect thousands of students who, by all standards, are not deserving cases. There will be huge savings on the government end but this needs to be balanced against impacting on the number of students accessing university education,” said Wambui Wamuyu, who runs an institution in Nairobi.

“The government would have to be careful how it rolls out this targeted funding, otherwise it can be abused or even lock out needy cases,” she added.

Kenya has already effected a further cut in funding to public universities for the financial year which kicked off in July 2022.

The national treasury, in a budget statement for the current fiscal period, said it had allocated US$793 million from the US$1.003 billion allocated last year, a 20% cut. The universities had requested US$1.8 billion from the government in their budget plans.

Alternative funding options

“The search for alternative options cannot be delayed any longer,” said Mwanyasi. “Raising tuition fees is one option. But to have a diversified revenue stream is even better.

“And this is where the endowment concept comes in, or simply a pool of assets invested by a college or university to support its educational and research mission in perpetuity. It does not hurt to copy a great concept. Struggling local institutions can follow the same path,” he added.

The shortfall in funding has seen most of the institutions struggle to remain afloat as the amount allocated by the government is not adequate to meet their expenditures in light of higher student enrolments.

This is made worse by the fact that the universities have, in the recent past, seen their internally generated funds dwindle on changes in government policy.

Until recently, universities would make up for the shortfall in government disbursements by raising revenue from enrolling self-sponsored students to the erstwhile lucrative parallel degree (self-sponsored) programmes.

But there has been a sharp decline in the number of self-sponsored students over the past three years since the government lowered the entry requirement for high school leavers to join universities.

“It is unlikely that this will be an easy decision to make for the education bureaucrats. But, with the government, itself, always falling behind on disbursements to the universities and most of the institutions struggling to stay afloat, perhaps it is time the government bit the bullet,” said Business Daily in an editorial on 17 October titled ‘Bite the bullet on public university fees review’.

“Many middle-class Kenyans currently pay much higher amounts of money to see their children through primary school. Having people in this social class pay more for their children at the university would relieve the pressure on taxpayer funds and free up financing to mostly needy students.

“However, university administrators should be under no illusion that raising the out-of-pocket fees for any category of students alone will solve their financial problems at the institutions,” said the newspaper, Kenya’s premier business title.

Shutdowns are looming

Most Kenya universities are grinding into a potential shutdown. Government data shows that public universities have statutory debts totalling US$190 million owed to the Kenya Revenue Authority.

This is in addition to outstanding statutory obligations to pension schemes, workers’ savings and cooperative societies. Egerton University, Kenya’s fifth-largest by student numbers, is facing imminent closure, for example.

“The university is broke. Any time we close, the situation gets worse. We are not talking about little money. As of September last year, Egerton had a debt of US$61 million. The figure continues to rise because some of these debts have compounded interest. We have raised the matter with the ministry of education and the treasury has been informed,” Egerton Vice-Chancellor Professor Isaac Kibwage was recently quoted as saying.