President William Ruto has proposed a new model to fully fund university and college education starting September 2026. While this plan removes the immediate cost of higher education for students, it introduces a loan repayment system that could deduct up to 25% of graduates’ monthly salaries once employed.

New Funding and Repayment Framework

The proposed Tertiary Education, Placement and Funding Bill, 2026, aims to replace the current Higher Education Loans Board (HELB) with a new body, the Tertiary Education Funding Authority (TEFA). TEFA will manage funding distribution and oversee loan recovery from graduates in formal employment.

Under Clause 49(4) of the Bill, salary deductions for loan repayments will not exceed 25% of the borrower’s earnings. This cap represents the maximum deduction allowed and does not imply automatic deductions at this rate for all graduates.

Loan Repayment Details

  • Graduates will begin repaying loans within one year of completing their studies, including interest and applicable charges.
  • Employers must be informed of employees’ loan status and are responsible for deducting and remitting repayments to TEFA monthly.
  • Late remittance by employers will incur penalties of 5% of the repayment amount per month delayed.

For example, a graduate earning Ksh40,000 monthly could have up to Ksh10,000 deducted, while someone earning Ksh100,000 might see a maximum deduction of Ksh25,000. Actual deductions will depend on the final regulations and loan amounts.

Implications for Students and Graduates

This funding model shifts the financial burden from upfront tuition fees to future earnings. Families will no longer need to pay university costs immediately, but graduates will face long-term repayment obligations deducted directly from their salaries.

The involvement of employers in loan recovery formalizes the connection between employment and education debt repayment. This could present challenges for young professionals who may already have financial commitments when entering the workforce.

Legislative Status and Outlook

The Bill is still under parliamentary consideration and may be amended before enactment. The proposed 25% salary deduction ceiling and other provisions should be viewed as potential rules rather than definitive requirements.

While the government’s promise of full funding aims to increase access to higher education, the repayment mechanism signals a significant change in how Kenyans will finance tertiary education—by shifting costs to the graduates’ working years rather than their student years.