The government is planning a major change in the way universities are funded, with funding expected to move out of the normal national budget from October 2026.
President William Ruto’s Council of Economic Advisers Chairperson David Ndii said the government plans to move university financing to a market-based model. Under the new system, the government would provide money to a special fund over a long period, while the fund would also raise additional money from financial markets.
This means universities would no longer depend entirely on annual funding from the national budget.
Ndii said the new system is expected to create a more sustainable way of financing higher education. The fund would be able to raise money from investors and other sources instead of relying only on yearly government allocations.
The announcement comes as the government prepares to introduce another major change in university funding.
President Ruto has said students admitted to universities from September 2026 will receive full financial support during their studies. The proposed support will cover tuition and upkeep, with students expected to repay the funding after getting employment.
The government is also seeking to create the Tertiary Education Funding Authority, known as TEFA. The new body would bring together the functions currently handled by the Higher Education Loans Board, Universities Fund and TVET Fund.
The proposed changes are contained in the Tertiary Education, Placement and Funding Bill, 2026, which is currently before Parliament.
The government says the reforms are meant to create a simpler and more sustainable system for financing students and institutions of higher learning.
The current funding model, introduced in 2023, combines scholarships, loans and contributions from households. The amount of support given to each student is based on their financial situation.
However, President Ruto has criticised the existing model, saying it did not provide enough support to universities and students. He has argued that the new system will offer better support while helping universities remain financially stable.
The planned changes could have a major impact on universities and students across the country.
For students preparing to join university in September, the new system could change how they receive financial support and how their education costs are covered.
The government is now pushing for Parliament to approve the proposed law before the new system is fully introduced.
If approved, the changes will mark a major shift in how Kenya finances higher education, moving university funding away from the traditional annual budget system and towards a market-based financing model.