Kenya’s Universities Fund is facing a projected KSh16.26 billion shortfall in scholarship funding for the 2026/2027 financial year, as rising university enrolment puts increasing pressure on government resources and threatens to leave students with less financial support.
The Fund requires approximately KSh47.36 billion to meet its scholarship obligations but has been allocated KSh31.1 billion, leaving a deficit of more than one-third of the amount needed. The shortfall comes as the number of public university students expected to benefit from government scholarships is projected to rise to about 608,879.
The widening gap highlights the challenge facing Kenya’s higher education financing system: more students are qualifying for university admission, but funding has not increased sufficiently to match the growing demand for scholarships.
For students and their families, the consequences could include reduced government support, greater pressure to meet tuition and living expenses, and uncertainty over how education costs will be covered during the academic year.
Student numbers rise sharply as funding struggles to keep pace
Data from the Universities Fund shows that the number of public university students supported through the government scholarship system increased from 118,153 in the 2023/2024 financial year to 253,042 in 2024/2025, before reaching 408,879 in 2025/2026.
The Fund projects that the number of beneficiaries will rise to approximately 608,879 in 2026/2027, an increase of nearly 49 per cent from the previous financial year.
The rapid expansion reflects the growing number of young Kenyans qualifying for university education. According to the Kenya Universities and Colleges Central Placement Service (KUCCPS), 202,133 students were placed in public universities for the 2026/2027 academic year. This followed an increase in candidates attaining the minimum university entry grade in the 2025 Kenya Certificate of Secondary Education examinations.
The growth represents an expansion in access to higher education, but it also means the government must provide more scholarships and loans, while universities require additional resources to accommodate larger student populations.
The challenge is particularly acute because scholarship funding must cover students from multiple admission cohorts, including continuing students whose support needs to be maintained as new first-year students enter the system.
How the funding gap affects students
The Universities Fund administers government scholarships for eligible students in public universities under the Student-Centred Funding Model introduced in 2023. The model uses assessed financial need to determine the level of scholarship support, with student financing potentially combining scholarships, loans and household contributions.
Under the projected 2026/2027 requirements, the KSh16.26 billion shortfall means the Fund’s allocation falls substantially below the amount required to meet its scholarship obligations.
For students, the immediate concern is how the shortfall could affect the value of financial support available to them. Those who receive less scholarship funding may need to rely more heavily on loans or contributions from parents and guardians.
The pressure is particularly significant for households already struggling with the cost of food, accommodation, transport and other living expenses.
In August, thousands of students preparing to join public universities faced uncertainty over their financial support as the government worked on changes to the funding framework. By August 20, the Universities Fund reported that 159,551 students had completed applications through the Higher Education Financing portal, including 150,403 applications involving a scholarship.
However, the funding deficit does not automatically mean that every student will lose scholarship support. Universities Fund acting chief executive Edwin Wanyonyi has said available resources are distributed among eligible students, meaning the level of assistance may be affected even where students receive some funding.
HELB faces a separate shortfall
The scholarship deficit is part of a wider financing challenge affecting Kenya’s higher education sector.
The Higher Education Loans Board (HELB), which provides student loans, has been allocated KSh56.3 billion for the 2026/2027 financial year against a requirement of KSh112.1 billion. This leaves a separate shortfall of KSh55.8 billion for an estimated 1.38 million university and Technical and Vocational Education and Training (TVET) students.
Combined, the Universities Fund and HELB face projected funding gaps of approximately KSh72.06 billion based on the reported budget requirements.
The shortfalls create competing demands on the government: expanding access to university education, ensuring students receive adequate financial support and addressing the financial difficulties facing public universities.
Universities have also accumulated substantial pending bills. Parliamentary budget reporting placed these liabilities at more than KSh100 billion, raising concerns about institutions’ ability to meet their obligations to suppliers, staff and service providers.
Such financial pressures can affect more than university balance sheets. When institutions struggle to pay their bills, they may face difficulties maintaining facilities, funding research, supporting students and sustaining the quality of teaching.
Government plans a new funding framework
The government is pursuing legislative changes intended to restructure the financing of universities and TVET institutions.
The proposed Tertiary Education, Placement and Funding Bill, 2026, seeks to establish a Tertiary Education Funding Authority that would take over functions currently performed by HELB, the Universities Fund and the TVET Funding Board. The proposal aims to consolidate the management of tertiary education financing under a coordinated framework.
As of October 28, 2026, the Bill has not become law. It remains subject to parliamentary consideration following public participation on the proposed education reforms.
The proposed changes have generated debate over how student assistance should be structured, the balance between scholarships and loans, and the repayment obligations graduates could face.
While consolidating funding agencies could change how resources are administered, it would not by itself guarantee that the money available would meet the sector’s needs. The government would still have to determine how much to allocate and how to balance competing demands.
The KSh16.26 billion scholarship shortfall highlights a central challenge for Kenya’s higher education policy: expanding university access while ensuring that funding arrangements remain sustainable.
The increase in scholarship beneficiaries demonstrates growing demand for financial assistance. Yet the gap between the amount required and the allocation available raises questions about whether current resources can adequately support both incoming students and those already enrolled.
Closing the deficit would require additional funding or adjustments to how scholarship resources are distributed, alongside measures to address the wider financial pressures affecting universities.
For students and their families, the key issue is whether government assistance will be sufficient to make higher education affordable. For universities, the challenge is ensuring that rising enrolment does not outpace the resources needed to deliver quality education.
