Kaguchia urges Parliament to cap student loan interest at 4% under proposed education bill

Mukurweini MP John Kaguchia has urged Parliament to amend the proposed Tertiary Education, Placement and Funding Bill, 2026, warning that the Government’s promise of full funding for university and college students could leave the poorest families burdened with unsustainable debt.

In a submission to the National Assembly Committee on Education, Kaguchia proposes capping student loan interest at four per cent, guaranteeing minimum scholarships for vulnerable learners and requiring graduates to begin repayments only when their incomes reach a prescribed threshold.

He supports the proposed consolidation of the Higher Education Loans Board (HELB), the Universities Fund and the TVET Funding Board into a single Tertiary Education Funding Authority (TEFA). But he argues that the legislation must establish clear safeguards on the amount students receive as scholarships, the interest charged on loans and when repayment begins.

“My concern is that the Bill, as published, does not yet secure that commitment,” Kaguchia said, referring to the President’s pledge that every qualifying student placed in a university or college would receive full funding.

He added, “Unless those terms are fixed by Parliament, full funding risks becoming full debt for the poorest families, and the Bill risks being struck down on the same ground as the model it replaces.”

At the centre of his proposals is a requirement that vulnerable students receive scholarships covering at least 82% of programme costs, while extremely needy learners receive at least 70%, without household contributions.

“If the Bill is implemented as a predominantly loan-based system, the student whose debt rises the most is the student from the poorest household,” he said.

Kaguchia also wants the Bill to cap interest at four per cent annually, matching the current HELB lending rate. He warns that allowing TEFA to borrow from commercial sources without restricting student interest rates could transfer the cost of borrowing to graduates.

His submission illustrates the potential burden using a four-year Bachelor of Arts degree costing Sh729,600 in tuition and upkeep. If financed entirely through loans, the debt could rise to approximately Sh1.32 million at an interest rate of 18 per cent.

“The interest rate is therefore not a technical detail; it decides whether the loan can be repaid at all,” he said.

The MP proposes replacing the requirement to begin repaying within one year of completing studies with an income-based system. Repayments would be suspended when borrowers earn below the prescribed threshold, pursue further studies or become incapacitated.

Beyond student protection, Kaguchia wants Parliament to approve TEFA’s annual borrowing limits and require the National Treasury and Education Ministry to submit a detailed financial assessment before the Bill proceeds to Second Reading.

“I do not support the calls for suspension of the Bill. I do ask that the Committee require the National Treasury and the Ministry to table a costed financial memorandum before the Bill proceeds to Second Reading,” he said.

He argues that the amendments would preserve the Government’s reform agenda while ensuring that expanded access to higher education does not translate into excessive debt for students and their families.