Gov't defends new Ksh.100B higher education funding plan

The Ministry of Education has defended the proposed Tertiary Education Placement and Funding Bill, saying it will help achieve the government's target of 100 per cent transition to institutions of higher learning.

While appearing before the National Assembly Education Committee, three Principal Secretaries from the Ministry of Education explained how the proposed fund will draw from a combination of government grants, borrowing through the capital markets, parents savings, student loan repayments and soft loans to meet the growing funding demands expected to hit Ksh.230 billion

This as the Ministry of Education is projecting that the number of students in higher education will double from 1.2 million this financial year to 2.4 million by the 2030/2031 financial year.

To meet the growing demand, the government has proposed a new higher education funding model that ring-fences a Ksh.100 billion annual government grant.

The Ksh.100 billion is the amalgamation of the existing allocations of Ksh.56 billion to HELB, Ksh.30 billion to the Universities Fund and Ksh.9.6 billion for TVET scholarships.

But with the sector already facing funding gaps, members of the National Assembly Education Committee demanded to know where the additional money will come from to sustain the growing demand.

HELB CEO Geoffrey Monari said: “We will use the bond programme to go to the commercial sector and we will be paying coupons every quarter, the first requirement and simulation we did was that we will require an additional Ksh.80 million which then we’ll be paying coupons every 6 months of Ksh.5 billion which makes it affordable from the government …so this money is not coming from the exchequer, Ksh.100 billion.”

Higher Education Principal Secretary Beatrice Inyangala added: “The boom is back, the loans will be awarded to students, irrespective of whether they go to a public or private universitiy because it is equal treatment of all students who are Kenyans.”

The members of the committee questioned the sustainability of the Bill which seeks to give all students who qualify to join higher education 100% loan.

Igembe North MP Titus Taitumu said: “The government is not even capable of raising money for capitation because we know in secondary schools the government is supposed to be funding Ksh.22,000 per learner but that amount the government is not able to raise, currently you’re providing about Ksh.16.000…”

“After 3 years, we are now able to go to concessional loans at less interest and we have calculated between 1-3% and there is a grace period of 10 years because you can repay for 30 years then you can be able to retire the bond programme and continue paying for students for a period of even upto 50 years as we continue going back to the bond market,” Monari noted.

The proposed one-year grace period granted to students who secure employment before loan repayment begins also drew questions from lawmakers, but the PSs said other revenue streams would sustain the fund.

The Bill also introduces a voluntary parent savings scheme, allowing families to save for their children's higher education from birth or at any stage before they enrol in tertiary institutions.

“The scheme will be regulated by CMA and will have a separate and transparent way of running the returns because there will be returns because it is your savings…it will be put back to the account of that parent so that when the child reaches higher education then we can be able to pay directly to the institution,” Monari said.

The Bill proposes a shift from need-based to universal student funding, ensuring that all eligible students access financial support based on the cost of their course as well as their upkeep requirements.