The Office of the Auditor General (OAG) has raised critical concerns about the New Funding Model (NFM) for higher education, which was recently declared unconstitutional by the High Court.
According to the Auditor-General’s report on National Government Ministries, Departments and Agencies for the Financial Year 2023/2024, the funding model, which adopted a student-centred funding approach using a Means Testing Instrument (MTI) to categorize learners into five financial bands, encountered eight critical issues during its implementation.
Among the issues flagged in the report are inaccurate data submission by applicants and limited public awareness about the model.
“Inaccurate data submission by applicants led to distorted MTI scores…limited public awareness that led to information gap for intended beneficiaries,” part of the report reads.
The Auditor General also pointed out that delays in the disbursement of loans and scholarships made higher education less accessible for many learners.
“Delayed funds disbursements in the form of loans and scholarships that disrupted students’ ability to pay tuition fees, access accommodation and cover living expenses,” the report added.
Furthermore, the report raised concerns about inclusivity, mentioning that vulnerable groups, such as students with disabilities and those from marginalized regions, faced challenges in securing adequate financial support.
In particular, it noted that Muslim students needing Sharia-compliant financial products struggled under the new system, which further hindered inclusivity.
“Inclusivity concerns where vulnerable groups, such as students with disabilities or those from marginalized regions, faced difficulties accessing the funds they need; Emerging concerns on unique challenges, such as those faced by Muslim students who require sharia-compliant financial products, further hindered inclusivity,” the report added.
Another significant concern is the loan repayment burden caused by high unemployment and underemployment rates.
The report warns that many graduates are struggling to repay their loans, which is increasing default rates and threatening the sustainability of the revolving fund.
“High unemployment and underemployment rates made it challenging for graduates to repay their loans, increasing default rates and threatening the sustainability of the revolving fund,” the report stated.
Coordination issues were also flagged, as the Auditor General noted a lack of collaboration between government agencies responsible for supporting higher education students, including the Higher Education Loans Board and the State Department for Technical and Vocational Education and Training.
Additionally, the funding model was not integrated with the Kenya Universities and Colleges Central Placement Service (KUCCPS) system, preventing the seamless tracking of students from university placements to funding allocation.
Funding model suspended
On December 20, 2024, the High Court ruled that the NFM is unconstitutional on grounds of discrimination and violation of students’ right to education.
The court clarified that the Government’s attempt to shift funding responsibility to parents violated the Constitution and the legitimate expectations of citizens, citing a lack of public participation which prohibited its implementation
“The changes in the funding model did not adhere to the necessary legal provisions in its creation,” Justice Mwita said at the time.
