New funding model places greater burden on the financially able

The Kenya government has formulated a new higher education funding model for public universities and technical and vocational education and training (TVET) institutions that has grouped students into three ‘financial’ categories: vulnerable, less vulnerable and able. Vulnerable students will be fully funded by the government.

The new model was developed by the Presidential Working Party on Education Reform that was appointed by President William Ruto in December 2022 to review Kenya’s education system.

Announcing the new model on 3 May, Ruto said the government was not increasing tuition fees but incorporating funding for universities and TVETs through government scholarships, student loans and household contributions.

Ruto said the vulnerable students will not pay tuition fees as they will get government scholarships that will cover the full cost of their education.

He said that, for the first time, poor students whose households are at the bottom of the income pyramid will enjoy equal opportunities in accessing university and TVET education. “Such households shall not make any contribution towards the education of their children,” stressed Ruto.

According to Ruto, about 45,000 vulnerable students will be fully funded by the government – that is 29% of new students who will join universities in the 2023-24 academic year.

In effect, what Ruto has done is to shift the burden of funding of higher education onto the shoulders of those who will be considered as less vulnerable and able and, at the same time, give a respite to those who will be considered to be vulnerable.

‘Less vulnerable’ and ‘able’

Students from less vulnerable backgrounds will receive government scholarships of up to 53% and 40% loans from the Higher Education Loans Board (HELB), and households will contribute 7%.

As for students from able backgrounds, the government will give them scholarships of up to 38% of the cost of their degree courses and 55% in the form of loans from HELB and households will contribute 7%.

According to Ruto, students will also be able to apply for bursaries from complementary funding agencies, including county governments and national government constituency development funds as well as private companies.

Still, the Universities Funding Board will, from time to time, inform students on the availability of various sources of funding through its portal and streamline the application process.

Universities will be required to declare and publicise the actual cost of their academic programmes and no public university shall increase tuition fees, or levy additional charges without the approval of the Universities Funding Board.

The government directed universities to reveal the full cost of their academic programmes to the Kenya Universities and Colleges Central Placement Service that will publish the information prior to the placement of students so that students can choose which universities they want to join.

According to Ruto, the new financing model will apply only to the new students who are scheduled to join universities in July this year, but stressed that continuing students – those who are already studying – will be governed by the earlier financing model whereby all students paid fees.

What this means is that continuing students will not be affected by the new funding that will be done through government scholarships, loans, bursaries and household contributions.

In this case, Ruto said the government was abandoning funding public universities through the differentiated unit cost, a formula that was based on the courses that a university offered.

To meet its commitment to funding university education, Ruto said the government will increase budgetary allocation for universities from KES54 billion (US$396 million) in the current fiscal year to KES84 billion (US$615.8 million) in the 2023-24 fiscal year, an increase of 56%.

With that kind of funding, the government increased capitation for students from an average of KES152,000 to KES208,000 per year, an increase of about 37%.

How will the means test work?

According to Ruto, the means-tested criteria of classifying students in the three levels of funding students was developed by the HELB, which provided levels or scales of students’ needs, and this will now be expanded to cover the overall funding of universities.

Interestingly, Ruto said local chiefs, priests, pastors and imams, in the case of Muslim students, will be the key to assessing the level of a student’s needs and placement in the funding categories.

Students will also be required to submit their parents’ tax filings to the Kenya Revenue Authority that will also be used to determine a household’s financial capacity to support its members.

So far, Kenyans are still digesting the funding information, but the new model is likely to become controversial, especially when it comes to determining who the vulnerable students are who will access free higher education in public universities.

In this case, organisations such as political parties, human rights activists and community leaders will be watching as to whether Ruto and his allies in the Kenya Kwanza coalition will use the funding of students as a political tool.

But, according to Ruto, Kenyans need to be honest with themselves and let those who can afford to pay for their children do it and also think on how to assist those who cannot afford it. “We must stop pretending that we are going to support all the children, even when we are not in a position to do so,” said Ruto.

To justify the new funding model, Ruto said increases in public universities’ and other tertiary institutions’ fees have led to reduced government funding per student and the time has come for those who can afford it to take on a higher responsibility.

He said the government and vice-chancellors have agreed that the Kenya National Bureau of Statistics be mandated to undertake professional assessment of the funding modalities (scholarships, loans and household contributions) on a yearly basis, to avoid an under-funding crisis.

Private universities

In the new funding model, students who will opt to join private universities will be free to apply for the HELB loans but will not get government scholarships. The same situation will also apply to students who will join public universities through parallel programmes. These programmes allow access to privately sponsored students in public universities to study alongside those who get support from the government.

Further, as of 4 May, it was not clear as to whether the government will place some of its sponsored students in private universities. If the government stopped placing some students in private universities, such universities that depend on government-supported students will be in financial distress.

Currently, only two private universities, Strathmore University and the United States International University, or USIU-Africa, do not receive government-sponsored students, as they found capitation per student offered by the government to be far below the cost of their degrees.

HELB

There are also indicators that heavy reliance on HELB student loans is likely to be problematic in future as the facility has not become a student-support revolving fund due to high defaulting.

According to Charles Ringera, the HELB chief executive, in March this year, defaulters were in arrears of KES60.6 billion Kenya shillings (US$445 million) of which 8.45 billion Kenya shillings was accrued in the past 10 years.

Although Ruto announced that the government had allocated KES10 billion to HELB in the 2022-23 academic year and this will be raised to KES31.6 billion in the 2023-24 academic year, there was no information as to how HELB will be reformed.

Additional funding has been on HELB’s wish list.

Scovian Lillian reports that, on 27 April, the chairman of HELB, appealed to the government to consider additional funding for it to address the growing deficit.

HELB Chairman Ekwee Ethuro indicated that the board was looking at efforts to broaden its resource mobilisation strategies as its current strategic plan was approaching conclusion in 2023.

Ethuro added: “Our effort to complement exchequer and loan recoveries as the key sources of funds are vigorously expanding to external resource mobilisation from multilateral development partners, donors, devolved funds, corporates, individuals, the ministry, departments, agencies, counties, and training institutions.”

The board further requested the government to consider donations and contributions channelled to HELB to be tax allowable; to lobby parliament to pass legislation to make HELB a central distribution point for students’ financing for the National Government Constituency Development Fund (NGCDF) and county bursaries; to pass a higher education levy or consider HELB for the training levy paid by companies, and to review the HELB Act to effectively support Resource Mobilisation.

Ethuro spoke at the board’s bi-annual consultative forum, themed: ‘Sustaining Quality University Education Amidst Sector Reforms and Funding Constraints’.

Ringera, the board CEO, at the same forum, affirmed the board’s support for the government’s reform efforts and, at the time, indicated that it was looking forward to receiving the recommendations from the presidential working party.

Ringera added: “We have embarked on institutionalising external resource mobilisation to aggressively mobilise for funds to supplement the exchequer funding, even as the demand for our services continues to pressure the current fund base.”

HELB has been facing challenges due to a drop in government subsidies which have affected about 142,361 students in 2020-21.