The New Universities Funding Model: All You Need to Know

Following President William Ruto's recent directive, public universities were instructed to withdraw the admission letters previously sent to incoming students and issue new ones that outline the financial contributions families are expected to make towards their children's education. So far, 100,080 revised admission letters have been sent out from 36 public universities. 

This directive sought to ensure that universities provide updated and accurate information regarding the portion of tuition costs that households would need to cover. 

This change is part of the Variable Scholarships and Loans Funding (VSLF), also known as the New Funding Model (NFM), which President Ruto introduced on May 3, 2023. 

The NFM was developed to tackle the significant challenges faced by public universities and TVET colleges in Kenya, including large enrollments and insufficient funding. The Higher Education Financing (HEF)notes that this student-centred model allocates scholarships and loans based on a student's assessed financial need.

Understanding the New Universities Funding Model

The New Funding Model replaces the Differentiated Unit Cost (DUC) system that was previously used to fund universities. As per the Universities Fund, the new model focuses on a student’s financial need and distinguishes between the processes of placement and funding. 

Instead of universities and TVET institutions receiving block funding through capitation, the new model channels financial support through scholarships, loans, and household contributions. The allocation of these funds will be determined by the Means Testing Instrument (MTI) and will be periodically adjusted by the Higher Education Financing (HEF).

The Ministry of Education has planned to implement this new funding model by categorising students based on their household income. 

Read also: How to Clear Your HELB Loan Faster: A 7-Step Guide

New University Funding Model Bands

Dr. Beatrice Muganda Inyangala, Principal Secretary for the State Department for Higher Education and Research, stated that the government plans to introduce five distinct ‘banding categories’ to classify students according to their families' financial ability. 

This system ensures that students from the most financially disadvantaged backgrounds receive the highest levels of government sponsorship and loans.

This banding system has been created using an improved Means Testing Instrument, which carefully considers factors such as household income, geographic location, poverty levels, the number of dependents in the family, and any special circumstances, including disabilities. This allows for a more precise assessment of each student's financial needs.

Students applying for financial aid to support their higher education will be categorised into one of five bands, depending on their household's income level and financial needs.

Band 1 is designed for students whose families have a monthly income of up to Ksh5,995. In this band, the government will cover 70% of the education costs through a scholarship, while a loan will cover an additional 25%, providing a total of 95% in support. The remaining 5% will need to be covered by the family, and the student will be eligible for an upkeep loan of Ksh60,000.

For students in Band 2, those from a family that has a monthly income of up to Ksh23,670, the government scholarship will cover 60% of the costs, and a loan will cover 30%, totalling 90% in support. The family will be responsible for 10% of the costs, and the upkeep loan will be Ksh55,000.

In Band 3, students from families earning up to Ksh70,000 per month will receive 50% of the education costs through a government scholarship, with an additional 30% covered by a loan, bringing the total support to 80%. The family will need to contribute 20%, and the upkeep loan will be Ksh50,000.

Students in Band 4, those from families with a monthly income of up to Ksh120,000, will have 40% of the education costs covered by a government scholarship, and 30% covered by a loan, totaling 70% in support. The family will be responsible for the remaining 30%. The upkeep loan will Ksh45,000.

Finally, students in Band 5, coming from families that have a monthly income above Ksh120,000, will receive 30% of their education costs through a government scholarship and 30% through loans, leaving the family to cover 40% of the costs. Students on this band will be eligible for upkeep loan of Ksh40,000. 

Read also: How to Apply for HELB Postgraduate Scholarships

Here's an example of how the new funding model works, and how much each student will receive in scholarships, tuition loan, and upkeep, based on the band they're placed in. It also highlights how much the household will contribute. 

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According to Education Cabinet Secretary Julius Ogamba, students who are unhappy with the bands they have been placed in can submit appeals through the Higher Education Financing Portal.

Government Support and Criticisms

The government has supported this new funding model, saying it will ensure that all students are supported based on their financial needs. President Ruto highlighted that the funding model is designed to prioritise the needs of students, particularly those from less privileged backgrounds, by providing them with loans to continue their education. 

However, some critics have expressed concerns about the government’s ability to assess each household’s income and financial needs accurately. They also question how the government will respond to changes in a household’s financial situation, such as income fluctuations or additional dependents enrolling in university.

Who is In Charge of the New University Funding Model

The implementation of the new Higher Education Funding Model involves several government entities:

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1. Higher Education Loans Board (HELB): Provides loans and bursaries to students in TVET colleges and universities.
2. Universities Fund (UF): Provides grants and scholarships to government-sponsored students in public universities.
3. Kenya Universities and Colleges Placement Service (KUCCPS): Manages student placements in their desired and qualified courses.
4. State Department for TVET: Handles TVET scholarships.
5. Higher Learning Institutions: Receive loans and scholarships and manage their disbursement as fees.

Read also: Who Qualifies for HELB Loans; Undergraduate, TVET, Graduate and Scholarships

Eligibility for the New Funding Model

According to the Higher Education Financing (HEF), the new funding model applies to:

1. University students from the KCSE 2022 to 2023 cohort.
2. TVET trainees admitted from September 2023.

First-time applicants can apply for financing through the HEF portal and will need to provide the following documents:

1. Valid email address and telephone number
2. KCPE and KCSE index numbers and years of examination
3. Passport-size photo (in jpeg/jpg/png)
4. Copy of National ID/Maisha Card (both sides in PDF)
5. Valid bank details or MPESA number (registered under the applicant’s name and ID number)
6. Parents’ National ID and registered telephone number
7. Copy of Parent’s death certificate if deceased (in PDF)
8. Applicant’s birth certificate in PDF (if applying as a minor)
9. Two guarantors’ ID numbers and registered telephone numbers (can be parents)
10. Copy of the sponsorship letter (in PDF) if sponsored in secondary school