The Higher Education Loans Board (HELB) is planning a major shift in the way it finances higher education by reducing reliance on the National Treasury and instead turning to financial markets through a proposed Sh500 million social bond.
The ambitious plan, currently under discussion with the World Bank, seeks to securitise HELB’s loan book and attract investors in order to guarantee predictable and timely funding for students in universities and Technical and Vocational Education and Training (TVET) institutions.
If successfully implemented, HELB Chief Executive Officer Geoffrey Monari said, the model could transform student financing in Kenya by ending persistent delays in loan disbursement, stabilising tuition payments to institutions and easing pressure on both students and universities.
Currently, about 450,000 Kenyans who previously benefited from HELB loans are actively repaying, enabling the agency to collect approximately Sh700 million every month.
“Our annual capitation is Sh41 billion. We give out about Sh46 billion annually, yet our capital base since 1975 stands at Sh200 billion,” said Mr Monari who spoke during an interview with the government spokesperson Mr Isaac Mwaura.
According to Mr Monari, HELB has experienced massive growth over the years, expanding from supporting just 1500 students in its early years to more than 650,000 students annually across universities and TVET institutions.
Higher Education Loans Board CEO Geoffrey Monari when he appeared before the National Assembly Committee on Education at Bunge Tower in Nairobi on May 14, 2025.
Photo credit: Dennis Onsongo | Nation Media Group
Of these, university students account for about 400,000 beneficiaries, while another 250,000 are enrolled in TVET institutions pursuing artisan, certificate and diploma programmes.
Despite the growth, Mr Monari admitted that loan repayment remains one of HELB’s biggest challenges, especially among graduates without stable incomes and those who require constant reminders to repay their loans.
“Those who need reminders are actually the better group because we actively engage them. So far, we have around 450,000 people repaying monthly and we are currently collecting around Sh700 million every month,” he said.
Apart from loans, HELB also sets aside Sh237 million annually in bursaries for needy students, with Sh137 million allocated to university learners and Sh100 million directed to TVET students.
Mr Monari said the agency gives loans to students in private universities however; scholarships is for students in public universities in addition to the loans.
“After issuing the normal loans, we identify students who are unable to raise the household contribution required. Under the old model, we gave between Sh4,000 and Sh8,000, but under the new model we now provide between Sh5,000 and Sh40,000 purely for tuition support,” explained Mr Monari.
Under the proposed social bond model, HELB intends to use expected loan repayments as security to raise funds directly from investors instead of waiting for National Treasury disbursements.
“A social bond will allow us to securitise the loan repayments we are already receiving. We have held discussions with the World Bank and they have reviewed our loan book and confirmed it can be securitised,” he said.
Mr Monari explained that the arrangement would enable HELB to access money in advance whenever universities reopen, ensuring students receive funds on time.
University of Nairobi students protest at Anniversary Towers in Nairobi which houses the Higher Education Loans Board on February 3, 2025 over delayed disbursement of funds.
Photo credit: Evans Habil | Nation Media Group
Currently, HELB depends on allocations that move through the Kenya Revenue Authority and the National Treasury before eventually reaching the agency, a process that sometimes causes delays in student disbursements.
“When students are reopening for the first semester, we will simply go to the market, raise the money early and disburse it on time. This will ease pressure on exchequer funding, ensure students receive loans promptly, universities receive tuition fees in good time and ultimately reduce strikes caused by delayed funding,” he added.
Mr Monari revealed that HELB plans to begin cautiously, securitising only about Sh500 million initially to cover funding shortfalls.
“We will only securitise about Sh500 million in the first tranche because we are only targeting the shortfall, which may be about Sh43 billion in the next financial year. We will then build on that gradually as we move along,” he said.
He cited countries such as Malaysia, Colombia and Chile among nations that have adopted similar financing systems and no longer rely entirely on their national treasuries to fund higher education.
According to Mr Monari, the growing number of students seeking university education means Kenya must begin exploring alternative financing mechanisms.
“We started with 1,500 students, but today if you look at the Kenya Universities and Colleges Central Placement Service (KUCCPS), we will admit around 270,000 students to universities from last year’s Kenya Certificate of Secondary Education, and the numbers will continue growing,” he said.
He noted that Kenya’s university transition rate currently stands at about 26 per cent, compared to between 40 and 60 per cent in developed countries.
“If we continue on the same trajectory as the population grows, we could have nearly two million students by 2030 because of the 100 per cent transition policy. That would mean around 700,000 students joining universities annually. There is no way the National Treasury alone can sustain that,” said Mr Monari.
The proposed social bond, he said, could therefore become a critical lifeline in securing the future of higher education financing in Kenya.
