To improve student financing and end delays in loan disbursement, the Higher Education Loans Board (HELB) is exploring a new funding approach. The plan would allow HELB to tap into financial markets through a proposed social bond backed by its loan book.
HELB’s CEO, Geoffrey Monari, said the proposal, currently under discussion with the World Bank, would securitize HELB’s loan repayments. He added that it would help attract investors to support steady funding for students in universities and TVET institutions.
If the government approves the plan, HELB expects it to address long-running funding delays, keep tuition payments on track for learning institutions, and reduce the pressure on both students and universities by ensuring funds reach them on time. HELB currently has about 450,000 former beneficiaries repaying their loans, which enables the agency to collect roughly Sh700 million each month.
“Our annual capitation is Sh41 billion. We give out about Sh46 billion annually, yet our capital base since 1975 stands at Sh200 billion,” Monari said during an interview with government spokesperson Isaac Mwaura.
Monari said HELB has grown substantially over the years, rising from supporting 1,500 students in its early days to backing more than 650,000 students each year across universities and TVET institutions. He noted that around 400,000 of those students study in universities, while about 250,000 are enrolled in TVET programmes, including artisan, certificate, and diploma courses.
Despite the expansion, Monari said loan repayment still poses a major problem, particularly for graduates who lack steady income and for those who need consistent follow-up to repay.
He said, “People who need reminders actually form a better group because we engage them actively. So far, we have around 450,000 people repaying every month, and we collect about Sh700 million monthly.”
He added that HELB also sets aside Sh237 million each year for bursaries for needy students, with Sh137 million allocated to university learners and Sh100 million to TVET students. The agency also provides loans to students in private universities, while it reserves scholarships for students in public universities and pairs them with loans.
Monari explained that after HELB issues the standard loans, it identifies students who cannot raise the required household contribution. He said that under the previous model, HELB provided between Sh4,000 and Sh8,000, but under the new approach it now offers between Sh5,000 and Sh40,000 specifically to support tuition.
Under the proposed social bond plan, HELB would raise money directly from investors by using expected loan repayments as collateral. This approach would remove the need to wait for National Treasury allocations.
Monari said, “A social bond will let us securitize the loan repayments we already receive. We have held discussions with the World Bank, and they reviewed our loan book and confirmed that it can be securitised.”
He also noted that the model would help HELB access funds ahead of the time universities reopen. This timing would allow the board to disburse money to students and institutions promptly.
Monari said HELB’s current process requires funds to move through the Kenya Revenue Authority (KRA) and the National Treasury before reaching the board, which often delays student financing. He argued that using the bond model would address this.
“When students reopen for the first semester, we will go to the market, raise the money early, and disburse on time,” he said. “This will ease pressure on the Exchequer funding, ensure students receive loans promptly, help universities get tuition fees in good time, and ultimately reduce strikes triggered by delayed funding.”
HELB plans to begin with a cautious approach by securitising about Sh500 million to cover immediate financing gaps.
“We will only securitise about Sh500 million in the first tranche because we will target the shortfall, which may be about Sh43 billion in the next financial year. Then we will build gradually from there,” he said.
Monari cited countries such as Malaysia, Colombia, and Chile, saying they have used similar financing models to reduce dependence on national treasuries for higher education funding.
He added that Kenya’s growing student population makes it necessary to explore alternative funding systems. He noted that HELB began by supporting 1,500 students, but KUCCPS now intends to admit about 270,000 students to universities from last year’s KCSE cohort, with the numbers expected to keep rising.
He said Kenya’s university transition rate stands at about 26%, compared to roughly 40% to 60% in developed countries. Monari warned that if Kenya maintains the same trajectory as the population grows, it could reach nearly two million university students by 2030 due to the 100% transition policy, meaning around 700,000 new students would join universities each year. He said the National Treasury alone cannot sustain that demand.
Monari concluded that the proposed social bond could provide a crucial way to secure the future of higher education funding in Kenya.
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