HELB, Universities Fund and TVET board face merger under new funding authority
Kenya is proposing a Tertiary Education Funding Authority that would bring major student financing functions under one institution and replace the Higher Education Loans Board (HELB), Universities Fund and TVET Funding Board.
The proposal is contained in the Tertiary Education Placement and Funding Bill, 2026, sponsored by National Assembly Majority Leader Kimani Ichung’wah, and comes as the government seeks to overhaul how university, college and technical training students receive financial support.
The proposed authority, known as TEFA, would administer loans and scholarships, maintain tertiary education funding data and recover money advanced to beneficiaries. It would also have powers to mobilise money from sources beyond the ordinary government budget, giving the proposed institution a considerably broader financial mandate than HELB currently has.
A single authority for tertiary education funding
The proposed legislation would consolidate functions that are currently distributed among separate institutions. HELB handles student loans and recovery, while the Universities Fund and TVET funding structures support other parts of the tertiary education system. Under the new framework, those responsibilities would sit within TEFA, creating a central institution for financing learners across universities and TVET institutions.
The idea of consolidation is not entirely new. A version of the Tertiary Education Placement and Funding Bill had already been developed as part of wider education reforms, with the government arguing that combining overlapping functions could reduce administrative duplication and create a more coordinated system for placement, scholarships and loans.
What makes the 2026 proposal particularly consequential is the scale of the authority’s proposed financial responsibilities. TEFA would not simply inherit HELB’s loan book and continue issuing student loans under a different name. It would be responsible for a broader funding architecture covering different forms of tertiary education support.
That distinction matters because the government’s wider policy direction is moving toward a system in which students placed in public universities, colleges and TVET institutions receive government support, replacing the needs-based funding model introduced in 2023. President William Ruto has said the government wants the new framework to provide full funding for eligible students, although questions remain about the exact financing formula and the fiscal cost.
The financing powers go beyond student loans
One of the most notable provisions in the proposed Tertiary Education Funding Authority is its ability to mobilise capital from a wide range of sources.
The Bill would allow the authority to seek financing through Treasury bills and bonds, concessional loans, government grants, savings schemes, unit trusts and commercial partnerships. It could also tap private capital, including money from domestic pension funds, collective investment schemes, sovereign wealth funds and climate-finance sources.
That provision changes the character of the institution. TEFA would potentially operate as a large education-financing vehicle that combines public allocations with investment and externally mobilised funds.
The proposal also provides for an education savings product through which individuals could put money aside for tertiary education. If properly designed, such a mechanism could add a household-financing component to the country’s education system, giving families an avenue to prepare for future tertiary costs rather than relying entirely on government support or loans once a student has secured admission.
There is, however, a significant difference between giving an authority the legal power to mobilise capital and actually securing enough affordable capital to finance the system. Pension funds, investment schemes and private financiers will still assess the risks and returns attached to any arrangement with TEFA. The legislation can create the framework, but it cannot by itself guarantee that these sources will provide the money the government needs.
What happens to existing HELB obligations?
The proposed abolition of HELB raises an immediate practical question for current and former beneficiaries: what happens to the existing loan portfolio?
Replacing the institution does not erase the debt owed to it. The new authority would inherit responsibility for loan recovery, according to the proposed framework, which means the transition would have to establish how existing beneficiaries, repayment records, arrears and collection arrangements are transferred.
That process will be particularly important because HELB already has a large base of beneficiaries and outstanding obligations. The proposed reforms therefore need clear transition rules covering existing loans alongside the new financing arrangements. The government will also need to avoid a period in which students are uncertain about where to apply, make repayments or resolve disputes.
The question becomes even more important if TEFA is expected to combine loans, scholarships and other forms of support. A student could interact with the same institution as a scholarship beneficiary, loan recipient or future loan payer, creating a much larger administrative responsibility than the current HELB mandate.
Governance and accountability will matter
The proposed authority would be overseen by a board chaired by a presidential appointee. Its membership would include the chief executive as an ex-officio member, the Principal Secretaries responsible for university education and TVET, the Treasury Principal Secretary and four other members who would not be public servants.
The chairperson and appointed board members would serve three-year terms and could be reappointed once, subject to satisfactory performance.
That structure gives the government substantial representation in an institution that could eventually control a large pool of public and privately mobilised education finance. It therefore makes governance one of the central issues Parliament will have to examine as the Bill progresses.
The authority’s investment powers will require particularly clear rules around procurement, conflicts of interest, disclosure and oversight. If pension money, collective investment funds or private capital is brought into the education financing system, the public will need to know how those arrangements are selected, priced and monitored.
A single institution can make administration simpler, but concentration also means that mistakes or weak controls can affect a much larger part of the tertiary education system at once.
The bigger test is whether the model can be funded
The proposed Tertiary Education Funding Authority arrives at a difficult point for Kenya’s higher education finances. HELB has faced funding pressure, while public universities continue to deal with substantial financial obligations. The proposed universal funding approach therefore creates a basic fiscal question: how much will it cost to support every eligible student, and where will the money come from?
The government’s answer appears to extend beyond the Exchequer. The Bill’s proposed access to bonds, concessional financing, private capital, pension funds, investment schemes and other sources is an attempt to widen the pool of money available for tertiary education.
That could give the new system more financing options, but it also makes the design of TEFA important. Parliament will need to establish how much funding should come from the Treasury, how much can be borrowed or invested, which support is provided as a grant and which portion remains repayable, and what safeguards apply when outside capital is involved.
The distinction between institutional reform and financial sustainability will be crucial. Merging HELB, the Universities Fund and TVET funding bodies can create a cleaner administrative structure, but it cannot by itself resolve a shortage of money.
For students, the measure of the new authority will ultimately be much simpler: whether funding arrives on time, whether the application process is predictable and whether the support provided matches the actual cost of studying.
For the government, the harder test will be sustaining that promise without creating another financing gap a few years down the line. The Bill therefore represents more than a proposal to replace HELB. It is an attempt to redesign the machinery through which Kenya pays for tertiary education, and the details of that machinery could prove as important as the decision to create the new authority itself.
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