NAIROBI, Kenya, Aug 13 – Kenyans with outstanding student loans who secure formal employment would be required to disclose their loan status to their employers under a proposed law.
The requirement is contained in the Tertiary Education, Placement and Funding Bill, 2026, dated July 24 and introduced in the National Assembly for First Reading on August 11.
The Bill requires a loanee in formal employment to disclose their loan status to the employer when taking up a new job.
Employers who hire loanees would also be required to notify the proposed Tertiary Education Funding Authority of the employee’s employment.
The employer would then deduct the monthly loan repayment determined by the Authority from the employee’s salary and remit it within nine days after the end of each month.
The deductions would continue until the loan is fully repaid or the loanee leaves the employment, whichever comes first.
The Bill proposes to cap monthly loan repayments at 25 percent of a loanee’s emoluments.
For borrowers in informal employment, the proposed law would require them to enter into a repayment plan with the Authority, specifying the mode and frequency of payment.
The proposed framework would require loanees to begin repaying their loans, including accrued interest and other charges, within one year of completing their studies.
The Bill also proposes penalties for employers who deduct loan repayments from employees’ salaries but fail to remit the money on time.
An employer would face a penalty equivalent to five percent of the unpaid repayment for every month, or part of a month, that it remains unpaid.
The proposed law is part of a wider restructuring of tertiary education financing, which would see the Higher Education Loans Board (HELB), Universities Fund Board and TVET Funding Board replaced by a Tertiary Education Funding Authority.
The new Authority would be responsible for mobilising funds for student and trainee loans, administering scholarships, maintaining funding data and recovering loans.
The reforms come amid continued funding challenges in universities and TVET institutions.
In July, Education Cabinet Secretary Julius Ogamba said public universities required Sh70.3 billion for scholarships and grants in the 2025/26 financial year but received Sh41.2 billion, leaving a Sh28.9 billion shortfall.
The proposed loan recovery system is intended to ensure that money advanced to students and trainees is recovered and made available to support future beneficiaries.
