Audit reveals inefficiencies, management flaws in new university funding model

The new higher education funding model, introduced to ensure financial aid reaches students based on need, has come under scrutiny after an audit revealed deep-seated inefficiencies and management flaws.

A report by Auditor-General Nancy Gathungu has exposed gaps that have left many students struggling to access funds, raising serious questions about the system’s viability.

The audit of the Universities Fund accounts as of June 30, 2024, shows that critical institutions handling student financial aid, including the Higher Education Loans Board (HELB) and the Technical and Vocational Education and Training (TVET) department are not working in coordination. This disconnect has made it difficult to track students throughout their academic journey.

“There is no coordination between the other government agencies dealing with higher education students’ support,” Gathungu stated.

One of the major weaknesses highlighted in the report is the lack of integration between the funding model and the Kenya Universities and Colleges Central Placement Services (KUCCPS) system.

Without a proper link, some students have received funds despite not being officially placed in universities, while others have been omitted due to missing or duplicated registration numbers.

Gathungu further revealed that scholarships were paid to students who had deferred their studies, failed to report to school or had been expelled. This has raised concerns about the system’s ability to fairly allocate funds.

“As such, the effectiveness of control over scholarship management processes could not be confirmed,” the report reads.

The new funding model rolled out under President William Ruto’s administration was intended to ensure fairness by classifying students into financial bands based on their economic background. However, the audit found that the means testing instrument used to assess students was flawed due to inaccurate data submitted by applicants, leading to miscalculations in aid distribution.

Another pressing issue is the lack of awareness about the funding model. The audit revealed that many students, especially those in marginalised regions, were unaware of how to apply for financial aid, limiting their chances of benefiting from the scheme.

Inclusivity has also emerged as a concern. The report says that students with disabilities and those from remote areas have faced difficulties accessing funds.

Muslim students requiring Sharia-compliant financial options have also encountered obstacles, raising questions about the system’s fairness.

“There were also emerging concerns on unique challenges, such as those faced by Muslim students who require Sharia-compliant financial products, further hindering inclusivity,” Gathungu noted.

Beyond these issues, the audit warns that the sustainability of the fund is at risk due to low repayment rates. Many graduates, struggling with unemployment and underemployment, are unable to repay their loans, increasing the risk of financial collapse for the programme.

Unemployment and underemployment

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“Loan repayment burden due to high unemployment and underemployment rates make it challenging for graduates to repay their loans, increasing their default rates and threatening the sustainability of the fund,” Gathungu said.

Since its implementation, the funding model has drawn criticism for its failure to guarantee fairness and efficiency. Many students have experienced delays in receiving their funds, with some still waiting for payments that were promised months ago.

The funding programme has also faced legal challenges.

Last December, the High Court declared it unconstitutional, ruling that it was discriminatory and lacked public participation.

Justice Chacha Mwita found that shifting the responsibility of university financing from the government to parents was a violation of the constitution.

“The legitimate expectation of the citizens was violated,” the court ruled, emphasising that the new model had locked out thousands of students from accessing education.

The case was brought forward by the Kenya Human Rights Commission, Elimu Bora Working Group, Boaz Waruku, and a student caucus, who argued that the model had severely disrupted learning in universities.

With mounting challenges, both legal and operational, the future of the university funding model remains uncertain.

As students continue to struggle with financial instability, pressure is mounting on the government to either overhaul the system or find alternative solutions to secure the future of higher education funding.