Education stakeholders in Western Kenya have expressed concerns over the proposed 4% annual interest on student loans, urging lawmakers to reconsider the provision. During a public participation session on the Tertiary Education, Placement and Funding Bill, 2026, representatives from various institutions, including Alupe University, argued that the interest would exacerbate the financial strain on graduates from low-income households. Many beneficiaries rely on loans to cover tuition, accommodation, and upkeep, and the added interest would only worsen their financial situation.
The proposed interest is part of a broader set of reforms aimed at financing education in Kenya. According to youth leader Harriet Opoma, the current proposal adds a KES 1,000 ledger fee to the 4% interest, which would be detrimental to students already facing economic challenges. Stakeholders emphasized that the financial burden would likely discourage students from low-income backgrounds from pursuing higher education. The education sector has been a key focus area for reforms in recent years, with the government seeking to improve access and quality.
Stakeholders also raised concerns about the repayment terms proposed in the Bill. The legislation stipulates that repayment should begin within one year after completing studies, a provision that Kibabii University stakeholders described as unrealistic for graduates struggling to find employment. Deputy Vice Chancellor Joseph Ogendo proposed amending the repayment trigger to one year after securing gainful employment, arguing that completion of studies does not guarantee a job within that timeframe. This concern was echoed by various stakeholders, who emphasized the need for more flexible repayment terms.
Another contentious clause in the Bill allows the authority to deduct up to 25% of a loanee's salary for loan recovery. Stakeholders urged a reduction to 10%, describing the current ceiling as excessively punitive. They argued that such a high deduction would leave graduates with insufficient funds for living expenses, further exacerbating their financial struggles. The proposed deduction has sparked debate among stakeholders, with some arguing that it is necessary to ensure loan recovery.
The education stakeholders' concerns were echoed by Parliament’s National Assembly Education Committee, which has noted the calls to scrap the interest rate. The committee has been debating the Bill as part of broader education financing reforms aimed at improving access to education. The proposed reforms have sparked nationwide debate, with stakeholders pushing for more affordable and accessible education. The committee is expected to consider the stakeholders' concerns as it continues to debate the Bill.
The Tertiary Education, Placement and Funding Bill, 2026, aims to overhaul the current education financing system in Kenya. The proposed reforms have been met with mixed reactions from stakeholders, with some welcoming the efforts to improve access to education and others expressing concerns about the financial implications. The Bill is expected to have a significant impact on the education sector, and stakeholders are closely watching its progress.
The debate over the proposed 4% interest on student loans highlights the challenges of balancing the need for education financing with the burden on low-income graduates. As the National Assembly Education Committee continues to debate the Bill, stakeholders are pushing for more affordable and accessible education. The outcome of the debate is expected to have a significant impact on the future of education in Kenya.
Key points
- Education stakeholders in Western Kenya urge lawmakers to scrap the proposed 4% annual interest on student loans.
- The proposed interest and repayment terms have sparked debate among stakeholders, who argue that they would exacerbate the financial strain on graduates from low-income households.
- Parliament’s National Assembly Education Committee has noted the calls to scrap the interest rate as it continues to debate the Tertiary Education, Placement and Funding Bill, 2026.
