Loans advanced to minors in universities will not attract any interest while the borrower is still below the age of 18 if proposals by Mukurweini MP John Kaguchia sail through the National Assembly.
Mr Kaguchia has proposed radical amendments to the Tertiary Education, Placement and Funding Bill, 2026 that touches on the welfare of students that will benefit from the government loans while pursuing higher education at the university and other technical institutions.
The Bill seeks to establish a new framework for financing and placing students in universities and Technical and Vocational Education and Training (TVET) institutions.
The Bill brings three funding bodies under one authority, provides for means testing that takes account of household circumstances, special needs’, affirmative action and programme cost.
Mukurweini MP John Kaguchia.
Photo credit: Joseph Kanyi | Nation Media Group
The lawmaker also wants the Bill amended that loans advanced to minors shall not attract any interest while the borrower is still a minor and that the loan agreement will be co-signed by a parent or guardian.
“A minor cannot ordinarily be bound by a contract of loan. The amendment makes the obligation enforceable and fair, consistent with the law of contract and the Children Act, 2022,” reads the proposed amendment.
Mr Kaguchia has also pointed out that clause 44 as currently framed in the Bill only talks about giving students loans and leaves out the scholarship component saying if passed without amendment, it will condemn many students to poverty.
“The ministry of education's own draft Bill stated that the purpose of the Bill was to provide loans and scholarships to eligible students. Clause 44 as published however states that the purpose of the fund as provision of education loans alone,” reads Kaguchia’s amendment.
The lawmaker also wants the four percent interest charged on loans by Higher Education Loans Board (HELB) should be determined by Parliament and not left at the discretion of the education Cabinet Secretary and Tertiary Education Funding Authority (TEFA).
Mr Kaguchia who has been scheduled to appear before the National Assembly Education committee next to defend his amendment is also pushing for the review on when one is supposed to start repaying the loan upon graduation.
In his proposal, Mr Kaguchia wants students who will receive loans from the government to only start repaying the loan after securing a job and not within one year as proposed in the Bill.
The lawmaker is also pushing for funding for students who will opt to join foreign universities as long as they are accredited and courses approved.
Mr Kaguchia is also proposing a new amendment that the total interest and penalties that may be recovered on a loan shall not exceed the principal amount of the loan outstanding at the time the loan falls into arrears.
The Bill requires repayment to begin within one year after completion of studies together with accrued interest whether the graduate is earning or not.
“Evidence before the House shows that many students will not be earning at that point,” Mr Kaguchia says.
Students apply for Helb loans in Nairobi.
Photo credit: File | Nation Media Group
He argues that repayment linked to income is the basis of every student loan system that has proven sustainable in most countries such as Australia, New Zealand, United Kingdom and South Africa.
In July, President William Ruto said every student who qualifies and placed in a university or college will receive funding from the government.
Mr Kaguchia however, pointed out that the president’s commitment is not captured in the Bill hence it will be difficult to implement if it’s not anchored in any law warning such a move risk the Bill being declared unconstitutional by the courts once passed by the House.
“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 model it replaces,” Mr Kaguchia said.
Mr Kaguchia argues that if the Bill is carried out as a loan based system, the student whose debt rises the most will be the one from the poorest household, a move he says is inconsistent with the President’s intention.
Under the current model, a student in the neediest band receives 70 per cent of the programme cost as a scholarship. The Presidential working party recommended 82 per cent for vulnerable students and 70 per cent for the extremely needy with no household contribution for either category.
Mr Kaguchia has also raised issues with the transfer of the ongoing students to the new funding model once the Bill becomes law saying such a move will increase the debt of the students.
“Changing that combination midway would retroactively increase the debt of students who made their decision on the basis of government’s published terms and would invite litigation on the ground of legitimate expectation. Reforms of this kind ordinarily apply to new entrants,” Mr Kaguchia said.
The lawmaker has also pointed out that the Bill in its current state has no cost of implementation hence it will be difficult for the House to know whether the country can afford it.
Tertiary Education, Placement and Funding Bill, 2026 is among the seven Bills that the education committee is currently conducting public participation on.
