Employers who fail to deduct and remit loans by employees who will benefit from the new university and college funding model face penalties of up to five percent of the total amount of the repayment for each month or recovery summarily as civil debt.
The Tertiary Education Placement and Funding Bill, 2026 requires an employer to deduct not more than 25 percent of a loanee emoluments while making deductions for loan repayments to the government.
The proposed law establishes the Tertiary Education Funding Authority whose function is to grant loans to eligible students and trainees pursuing tertiary education.
The Bill defines tertiary education to mean formal post-secondary education offered in a university, collage, and technical and vocational training institution recognised by the relevant educational bodies.
“A loanee in formal employment shall disclose his or her loan status to the employer at the commencement of the employment,” the Bill, which was read for the first time in the National Assembly on Tuesday, August 11, 2026, states.
“A loanee in the informal employment shall enter into a payment plan with the Authority on the mode and frequency of payment,”
The Bill stipulates that in making deductions in loan repayments, the Tertiary Education Funding Authority shall deduct not more than 25 percent of the loanee’s emoluments.
The proposed law requires that every employer of a loanee shall upon employment of the loanee, inform the authority in writing or in such other manner as the authority may specify.
Higher Education Principal Secretary Beatrice Inyangala and Higher Education Loans Board CEO Geoffrey Monari before the Senate Education Committee on March 20, 2025.
Photo credit: Dennis Onsongo | Nation Media Group
It requires employers to deduct from the emoluments of the loanee such monthly deductions as may be determined by the authority until payment in full or exit from their employment whichever is earlier.
Employers will be required by law to ensure that they remit such deductions within nine days after the end of the month.
“The authority shall charge an employer, who after making a deduction from the employee emolument, fails to remit the deduction to the authority within the prescribed period, a sum equal to five percent of the total amount of repayment for each of the month or part of the month that the repayment remains unpaid,” the Bill states.
“All sums due to the authority shall be recoverable as debts due to the authority, and without prejudice to any other remedy, may be recovered by the authority summarily as civil debt.”
The Bill imposes a Sh1 million fine or imprisonment for a term not exceeding two years for individuals who breach the law.
The Bill provides that every student or trainee admitted into a public or private tertiary institution would be eligible for an education loan.
The proposed law, currently before the National Assembly, states that on admission to a tertiary institution, a student or trainee wishing to be funded shall apply for the grant of an educational loan.
Those who secure the educational loans will be required to commence repayment of the loan together with any accrued interest or any other charges within one year of completion of studies.
The applicants will apply for the loans to the Tertiary Education Funding Authority whose mandate is to among others mobilise funds for lending to students and trainees pursuing tertiary education, grant loans to eligible students and trainees pursuing tertiary education, administer scholarships to eligible students pursuing tertiary education and establish and maintain a system for data management relating to funding of tertiary education.
