The Treasury has proposed cutting the Higher Education Loans Board (Helb) budget by Sh3.7 billion in the financial year starting July, which could affect thousands of loan beneficiaries.
The Treasury is seeking to allocate Sh33.3 billion to HELP to fund thousands of needy students in universities and colleges in the 2024-2025 financial year.
If MPs approve the proposal, it would represent a 10 percent cut in HELP's budget, down from Sh37 billion allocated in the current financial year that ends next month.
The budget cuts will likely exacerbate the delays students have faced in recent years in receiving their payments from Helb. The delay has particularly affected students in need, who often rely on HELP loans to maintain their stay in school.
Help retained its role in distributing loans to students under the new higher education financing model introduced by President William Ruto last year.
Under the old model, the loan entity funded needy students with between Sh35,000 and Sh60,000 annually.
However, due to funding hurdles, the average stipend for students dropped to Sh37,000 from Sh47,000.
In the new funding model, the University Fund was given the role of disbursing scholarships to needy students.
The demand for student loans has been steadily increasing for years as the number of learners enrolling in universities and technical and vocational education and training (TVET) institutions continues to grow.
According to the Treasury, enrollment in public and private universities combined rose by 11.72 percent, from 571,510 in the 2020/21 fiscal year to 638,479 in the 2022/23 fiscal year.
This has led to a rise in demand for undergraduate student loans, with the number of undergraduate students taking out Helb loans rising from 229,727 in the 2020/21 financial year to 244,552 in 2021/22 before falling to 228,453 in 2022/23. At the same time, the number of students enrolled in general TVET rose by 52 percent, from 250,733 to 380,638 during the three years.