State funding model tested by record varsity admissions

The entry of more than 268,000 students into universities this year is set to pose the biggest test yet for the government’s new funding model, amid a steady decline in funding since its rollout three years ago.

If all are absorbed as government-sponsored students, the total number under the funding framework introduced by President William Ruto will rise from the current 437,648 to 706,348.

The surge in student numbers comes against a backdrop of stagnant budget allocations, posing a major challenge for the model, and reviving concerns that mirror the weaknesses of the system it replaced.

On April 7, the Kenya Universities and Colleges Central Placement Service (KUCCPS) invited candidates who sat the 2025 KCSE examinations to apply for degree and TVET programmes.

“KUCCPS received results for 980,444 eligible candidates, out of whom 268,700 attained mean grade of C+ and above, qualifying them for placement to degree programmes in the 43 public and 31 private universities. The remaining 711,744 who scored between C plain and E are qualified for placement to public colleges and other TVET institutions,” KUCCPS said in a statement. 

Currently, 437,648 students are funded under the system, drawn from three cohorts: 122,634 admitted in 2023, 134,889 in 2024, and 180,125 in 2025.

With 268,700 candidates who attained a mean grade of C+ and above now eligible for university placement, the number under State funding could rise sharply to 706,348.

Higher Education Principal Secretary Beatrice Inyangala told MPs that funding for the 2025/26 financial year remains unchanged, despite the admission of the largest cohort to date. 

The Ministry of Education requires Sh29.55 billion to fully support students under the model, but has been allocated only Sh16.92 billion, leaving a funding gap of Sh12.63 billion. Universities are therefore operating on just 57 per cent of the required resources.

Shortfall

An additional Sh1.5 billion has been proposed under Supplementary Budget I to support scholarships, which would raise total funding to Sh18.42 billion and increase coverage to 62.25 per cent. However, this still falls significantly short of the requirement.

The shortfall reflects a steady decline in funding since the model was introduced.

In its first year, the government fully met the funding requirement, bolstering confidence in the system. In the second year, funding dropped to about 64 per cent, before declining further to 57 per cent this year.

Figures from the Universities Fund show that in the 2024/25 financial year, institutions required Sh26.57 billion but received Sh16.92 billion.

The gap has since widened as student numbers have grown without a corresponding increase in funding.

The strain is now being felt across universities, many of which remain burdened by debts accumulated under the previous Differentiated Unit Cost (DUC) model.

According to documents tabled in Parliament, public universities are carrying debts of over Sh100 billion, while private universities are owed about Sh60 billion by the government.

Among the most indebted institutions are Egerton University (Sh25.5 billion), the University of Nairobi (Sh16.99 billion), the Technical University of Kenya (Sh14.13 billion), Kenyatta University (Sh12.79 billion), and Moi University (Sh10.38 billion).  The situation has left several institutions on the brink of financial distress.

PS Inyangala told the National Assembly Education Committee that 11 universities are technically insolvent, meaning their liabilities exceed their assets. Although this marks an improvement from 22 previously, she warned that continued underfunding could reverse these gains.

“We previously had 22 technically insolvent institutions, but that number has now improved to 11. However, if underfunding persists, more universities risk falling into insolvency,” she said.

A significant portion of the debt relates to unpaid statutory deductions and other obligations. Universities owe billions in Pay As You Earn (PAYE) taxes, pension contributions, supplier payments, and staff arrears, including for part-time lecturers.

The debt crisis also extends to private universities that admitted government-sponsored students between 2016 and 2023. These institutions were expecting Sh77.24 billion in funding but have received only Sh18.99 billion, leaving a substantial outstanding balance. The final cohort of these students is expected to complete their studies this year.

Mount Kenya University is owed Sh11.6 billion, followed by KCA University (Sh6.64 billion) and Kabarak University (Sh6.46 billion). Others owed substantial sums include Kenya Methodist University and the Catholic University of Eastern Africa.