he Higher Education Loans Board (HELB) has warned that Kenya's student financing programme is under growing financial pressure, with demand for loans expected to far exceed available funds in the 2026/27 financial year.
The Board told Parliament it is staring at a projected funding gap of Sh57.65 billion, raising fresh concerns over its ability to continue supporting the rising number of students seeking higher education under the Student-Centred Funding Model.
Appearing before the National Assembly Departmental Committee on Education during deliberations on the FY2025/26 Budget Implementation Status, HELB said the number of students requiring financial support has continued to rise, stretching the resources available for loans and bursaries.
Documents presented to the committee show that HELB expects 1,199,423 students to seek financial support in FY2026/27. The projected loan requirement stands at Sh114.36 billion against an approved budget of Sh56.71 billion, leaving a financing gap of Sh57.65 billion.
"The projected financing position for FY2026/2027 indicates continued growth in demand, with an estimated 1,199,423 students requiring support with a projected loan requirement of Shs.114.36 billion against an approved budget of Shs.56.71 billion, resulting in a projected funding gap of Shs.57.65 billion," Monari said.
Monari added that, "HELB continues to work closely with the Ministry of Education and the National Treasury to mobilise additional resources to sustain equitable access to higher education financing."
The Board said the funding pressure has continued to build since the introduction of the Student-Centred Funding Model, which increased the number of students eligible for government support.
According to HELB, the number of students requiring financial assistance rose from 567,338 in FY2023/24 to 823,691 in FY2025/26, placing greater pressure on the available budget.
The Board told lawmakers that financing gaps have continued to grow over the years. It said the shortfall stood at Sh29.27 billion in FY2024/25, narrowed to Sh18.58 billion in FY2025/26 before rising sharply to the projected Sh57.65 billion in the coming financial year.
Even with the growing funding challenge, HELB reported strong budget implementation during FY2025/26 after increasing its own revenue through better loan recoveries and other income sources.
The report shows Parliament approved a budget of Sh45.665 billion, made up of Sh40.939 billion from the Exchequer and Sh4.726 billion in Appropriations-in-Aid (A-I-A).
Following stronger loan recoveries, HELB revised its operational budget to Sh49.137 billion in April 2026.
The Board spent Sh50.043 billion during the financial year, representing 102 percent budget absorption, and recorded an operational surplus of Sh543,372.
HELB said the improved performance was driven by stronger internally generated income.
Loan recoveries reached Sh7.625 billion against a target of Sh6.963 billion, representing 110 per cent performance.
Interest income also exceeded expectations after generating Sh196.685 million compared to the target of Sh110 million, while miscellaneous income reached Sh417.869 million, representing 131 per cent of the target.
"The performance partially cushioned the effects of constrained Exchequer funding and enabled HELB to continue financing eligible students. Nevertheless, the revenues generated remained insufficient to fully bridge the growing student financing gap." Monari affirmed.
During FY2025/26, HELB supported 823,691 students through loans and bursaries in universities and Technical and Vocational Education and Training (TVET) institutions.
Out of the total beneficiaries, 233,333 students received loans, while 364,279 TVET students benefited from bursaries as part of the government's Bottom-Up Economic Transformation Agenda and Vision 2030.
Monari also told the committee that HELB did not undertake any capital projects during the financial year because all the funds provided by the National Treasury were directed towards recurrent expenditure.
"There were no capital projects in FY2025/2026. The entire budget allocated by the National Treasury was for recurrent expenditure."
The Board identified three key risks affecting its operations during FY2025/26. These include financial pressure caused by growing demand for loans against limited funding, liquidity challenges due to inadequate resources to meet obligations, and operational risks linked to ongoing land litigation.
To address the challenges, HELB said it will continue engaging the National Treasury for additional funding, strengthen loan recovery and resource mobilisation efforts, pursue legal appeals in ongoing court cases, and enhance governance alongside regular risk assessments.
Monari cautioned that while HELB has fully utilised the resources available and strengthened loan recovery measures, the rising demand for student financing cannot be sustained without increased government support.
"HELB fully utilised the available resources to support higher education financing and enhanced resource mobilisation through robust loan recovery mechanisms. However, increasing demand under the Student-Centred Funding Model continues to outpace available funding, underscoring the need for additional fiscal support and long-term financing solutions to sustain equitable access to higher education."