Increasing school fees pushed more parents to seek financial support from Saccos, with the majority relying on affordable credit facilities to pay for school fees, college education, professional training and other learning expenses, driving education loans to Sh24.81 billion.
According to a report by the Sacco Societies Regulatory Authority (SASRA), education borrowing increased by 27.1 per cent in the first quarter of 2026, making it the second-largest reason Kenyans borrowed after land and housing.
The increase saw education loans overtake borrowing for trade and other commercial activities, highlighting the growing pressure households face in meeting education costs.
SASRA data shows regulated Saccos disbursed Sh115.73 billion in loans during the first three months of 2026, with land and housing receiving the largest share at Sh33.74 billion.
Land and housing, education and agriculture emerged as the top three lending categories, showing that Sacco members are prioritising property ownership, family welfare and food production.
“Between January and March 2026, regulated Saccos disbursed Sh24.81 billion towards education-related needs, including school fees, college education, professional training and other learning expenses,” SASRA said in its latest Industry Quarterly Statistical and Soundness Report, Quarter One - March 2026.
The report shows households are changing their borrowing patterns as they deal with increasing costs of education, healthcare and housing while reducing spending on non-essential needs.
Unlike previous years when consumer borrowing took a bigger share of Sacco lending, loans for consumption and social services grew by only 0.56 per cent to Sh8.82 billion, making it one of the slowest-growing lending categories.
The rise in education loans reflects the growing burden of school fees on family incomes, with parents increasingly turning to Saccos due to lower interest rates and flexible repayment terms compared to commercial banks.
The financing option allows families to spread education expenses over longer periods without putting too much pressure on their daily household budgets.
Beyond education, healthcare also recorded a sharp rise in Sacco borrowing during the period under review. Although loans for hospital bills accounted for a smaller share at Sh2.79 billion, the category recorded the fastest growth at 31 per cent.
Education followed with a 27.1 per cent increase, while land and housing loans grew by 18 per cent.
The rise in medical borrowing points to growing pressure on families as treatment costs increase, pushing more households to seek affordable credit to meet hospital expenses.
“Combined, land and housing, education, health and agriculture accounted for more than Sh79 billion in loans during the first quarter, dwarfing borrowing for consumption,” SASRA data shows.
The trend indicates that families are increasingly using credit for investments and essential needs rather than lifestyle spending.
Land and housing remained the largest recipient of Sacco loans, attracting Sh33.74 billion during the three months to March 2026, as demand for land purchases, home ownership and property development remained strong.
Within the category, land acquisition received Sh18.45 billion while housing-related borrowing stood at Sh15.29 billion.
Agriculture ranked third among the leading recipients of Sacco credit after receiving Sh18.70 billion in the first quarter of 2026, an increase from Sh17.54 billion during the same period in 2025.
Crop farming received the largest share of agricultural loans at Sh10.03 billion, followed by animal production at Sh6.57 billion.
Agricultural support services received Sh920 million, agribusiness activities accounted for Sh840 million, while forestry and logging received the smallest allocation at Sh340 million.
Other sectors that received Sacco financing included trade activities, which attracted Sh15.74 billion, finance, investments and insurance with Sh6.63 billion, and manufacturing and servicing industries with Sh4.50 billion. Human health activities received Sh2.79 billion during the period.
At the bottom of the lending categories was consumption and social services, which received Sh8.82 billion and recorded only 0.56 per cent growth compared to the previous year.
However, SASRA raised concerns over the quality of loans in the sector, noting that some borrowers are facing challenges in repaying their loans.
The regulator said the industry’s non-performing loan (NPL) ratio stood at 6.42 per cent at the end of March, above the recommended prudential ceiling of five per cent.
The high level of bad loans shows that while demand for credit remains strong, some households continue to experience financial pressure, affecting their ability to repay loans.
According to SASRA, Kenyans borrowed more than Sh123 billion from Saccos in the first three months of 2026.
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