Private universities give their input on the university funding model

NAPUK Chairman Prof. Simon Gicharu who is also the Mount Kenya University (MKU) chairman and founder.

Private universities in Kenya have proposed that students in both public and private universities be supported through inclusive loan products covering tuition fees, books and upkeep.

The institutions have also proposed significant policy and legal reforms to the university funding model, calling for the establishment of a state agency to oversee student financing. 

Their umbrella body, the National Association of Private Universities in Kenya (NAPUK) has advocated for merging key agencies involved in university education to form the National Students Financial Aid Corporation (NSFAC). This is in contrast to the new university funding model, which limits students in private universities to loans. 

However, the NAPUK idea aligns with recommendations from the Presidential Working Party on Education Reforms, approved by the Cabinet on January 21, 2025, at State Lodge Kakamega.

This comes days after the newly introduced university funding model was declared illegal and unconstitutional by the High Court. The High Court decision has been posing a fresh headache to universities to a point that it was compelled to revert to the old funding model for two cohorts of students.

The government is grappling with the new university funding model, adjusting the Means Testing Instrument (MTI) following a High Court ruling that annulled the model in December 2024, citing discrimination concerns. As a result, the government reverted to the old Differentiated Unit Cost (DUC) model to disburse funds to first- and second-year students affected by the ruling, which also has weaknesses.

However, private colleges  says  the crisis affecting more than 250,000 university students could be resolved via the establishment of an independent body to oversee the higher education funding and move away from reliance from the straining Exchequer. 

In a letter to the Education Cabinet Secretary Julius Migos, NAPUK chairman Prof. Simon Gicharu who is also the Mount Kenya University (MKU) chairman and founder, has recommended that Universities Fund and the Higher Education Loans Board be merged into a single, professionalised body with the mandate to fund both study and research.

“The context, together with the legal challenges facing the new funding model present the ministry with an advantageous opportunity to rethink the whole question of funding of higher education. Conceptually, it is proposed that the model should depart from a social-welfare orientation and move towards greater sustainability by funding students through loans that would be recoverable in future,” he noted. 

“The focus of the government should be on promoting access by reducing the financial burden on the students and the parents, while also ensuring that it retains the ability to provide the same kind of support for the students seeking opportunities in the future,” Prof Gicharu says. 

In the letter, Gicharu says the approach may be complemented with a level of performance- based scholarship grants, only to such a limit as the government can afford in any given financial year but hinged on highly prioritized government programs which are not necessarily market driven.

Beyond this, he added that other students, whether in public or private universities, can be supported through appropriate and inclusive loan products focused on tuition fees, books and upkeep. To this end, NAPUK has proposed the establishment of a funding body which they noted should be given a legal capacity that supports its sustainability.

The new body, whose name they proposed to be the National Students Financial Aid Corporation (NSFAC), should be functionally independent and professionalized. “The envisioned outfit should be focus on supporting university students and all other students pursuing higher education courses in tertiary institutions,” says the NAPUK chairman. 

The idea comes from South Africa’s National Student Financial Aid Scheme (NSFAS), which funds both university and TVET students. “In South Africa, NSFAS is a government entity under the Department of Higher Education and Training, established under the NSFAS Act of 1999.” NSFAS sources funding from government, donors, and private contributions, supporting targeted programs such as the Funza Lushaka Bursary Programme to attract youth to teaching.

“In addition, it should have the capacity to source funding from other sources beyond the exchequer. The body should have the capacity to raise funding both the local and international partners, and to explore revenue raising measures such as education bonds and other agencies such as unclaimed financial assets as well as training levy and the industrial training levy,” he says. 

The new association should also adopt other measures including imposing levies on the profits of institutions or individuals that benefit from specified types of training. “The proposed corporation could also establish an endowment fund and generally, be able to invest with an eye to the future. More importantly, the mechanisms for recovery of due loans should be effective and efficient,” Prof Gicharu says. 

For effective and efficient funding and recovery of loans, NAPUK suggests the introduction of a reliable information management system which they stated will help make dependable projections for the budget purposes and for determining the requirement for each applicant.

"The current approach, by which a student's level of need is determined upon application, may not be reliable as it may not necessarily provide an accurate historical profile of the applicant. It also undermines future planning, as it is not easy to anticipate the financial requirements,” stated the association in the letter.

NAPUK says the information management system should have a holistic historical profile of the candidate, with background information that is sourced right from the basic education level as opposed to the current student's financing appraisal system that is often activated when the students are admitted into various institutions.

The corporation, they proposed should be mandated with not just disbursing grants and loans and recovering from beneficiaries but also maintain a database of information on the tertiary education system, including on the students and funding; and further spearhead dynamic resource mobilization measures to augment government funding, especially by spurring the involvement of the private sector.

“Importantly still, it will have to work with tertiary education institutions to properly cost and price tertiary education programmes, to avoid prohibitive and unjustified costs while maintaining quality and relevance,” recommended the association.

The association called on the government in partnership with stakeholders to explore the opportunities for creating an enabling legal and policy environment to facilitate private sector players to competitively enter the tertiary education funding market to not only promote access to higher education but also ease overburdening of the exchequer which they said has worked in other countries.

Should the High Court orders declaring the government’s funding model as illegal remain, questions linger about whether the government will stick to the previous funding model.

The controversial funding model which is President William Ruto’s invention sought to address financial woes in universities but has since faced chaotic opposition from students and some university staff, who have been demanding for its dissolution.

The proposal comes as the government refines the new university funding model, adjusting the Means Testing Instrument (MTI) following a High Court ruling that annulled the model in December 2024, citing discrimination concerns. As a result, the government reverted to the old Differentiated Unit Cost (DUC) model to disburse funds to first- and second-year students affected by the ruling, which also has weaknesses.

Introduced in 2017/2018, DUC aimed to have the government finance 80 per cent of university education costs, with the remaining 20 per cent covered by parents and universities. However, this target was never met. Public universities received a maximum of 66.4 per cent (2018/2019), while private universities peaked at just 18 per cent.

“The steady decline in DUC funding significantly contributed to the financial crisis in universities, prompting the introduction of the New Funding Model,” NAPUK says. 

Prof Gicharu emphasises that their proposal moves away from a social welfare approach toward a more sustainable system, where students are funded through recoverable loans. “This aligns with the government’s legal mandate in tertiary education,” he noted.

To ensure sustainability, NAPUK proposes performance-based scholarships, limited to the government’s financial capacity within a given fiscal year and aligned with nationally prioritised programmes.

“Students in both public and private universities should be supported through inclusive loan products covering tuition fees, books, and upkeep,” he added.