Nairobi — University of Nairobi students at a past graduation ceremony. Helb has been weighing the possibility of financing private students amid a push by public universities to increase fees.

March 28, 2008: More than 50,000 privately sponsored students in public universities are set to benefit from State financing.

Treasury has provided Sh500 million to enable the Higher Education Loans Board - which finances students enrolled in local universities - to extend the services to the students during the coming financial year.

Helb had requested for an extra Sh500 million, expected to cater for an increased number of university students (at least 6,000), as well as rope into the plan parallel degree students in State universities.

However, Helb's development expenditure is expected to grow further as it intends to build a head office at a cost of Sh800 million, to help it save on rent payments estimated at Sh18 million a year. Benjamin Cheboi, Helb's chief executive, told Business Daily that the allocation for the board's offices had been requested as an extra vote.

Treasury has recommended that Helb puts up mechanisms to streamline the funding of university education with all forms of funding being disbursed based on testing of would be beneficiaries. If realised, this could see only needy students benefit from the university loans.

"Capitalisation to Helb should be increased to cater for increased numbers in public universities," says Treasury in the Medium Term Expenditure Framework which contains budgetary projections for the June 2008 Budget.

Mr Cheboi said demand for university loans was at its highest, amid budgetary constraints. "Including self-sponsored students further needs an aggressive loan recovery mechanism as well as extra budgeting to service the demand," he said.

Helb has been weighing the possibility of financing private students amid a push by public universities for upward adjustment of fees.

Private universities have also been known to charge higher fees, frustrating thousands of parents and guardians with university going students, especially those under the private programmes in State owned universities.School fees accounts for 60 per cent of an average Kenyan household's annual spending , according to past studies.

Self-sponsored students pay annual fees ranging between Sh120,000 and Sh200,000 depending on courses they are undertaking.A new policy to delink admissions to bed capacity will see an additional 6,000 students admitted to the seven public universities this year of which 2,200 have already joined.

The increase is also informed by a decision by the Joint Admissions Board to lower minimum entry requirements. Since 1990, public universities have been admitting about 10,000 students annually, partly due to donor conditions and because that was the number of students the universities could accommodate. Helb relies on government grants for loans and bursaries.

But with the revenue from loan repayments growing only marginally, while demand is currently way above supply, matters are beginning to look bleak for the body.In the current financial year, Helb received Sh850 million from Treasury but disbursed loans worth more than Sh1.1 billion.

The estimates indicate that Helb will get Sh1.5 billion during the 2008/2009 financial year. Educationists reckon access to university education and its financing is one of the biggest challenge that the State will have to cope with in the next two years.

They argue that as a developing country that hopes to join newly industrialised nations (NICs) in 2030, Kenya has to transform its higher education by giving it a new focus, injecting more funds, restructuring its co-ordination, changing teaching methodology, aggressive marketing and linking it with industry needs.At least 10,000 privately sponsored students expressed interest in the loans.

Helb is set to float a Sh7 billion education bond to raise money it needs cope with rising demand for its services among university students.

Although no time line has been set yet, the Board plans to package its Sh7.4 billion performing loans portfolio into sizeable corporate bonds products that can be listed on the Nairobi Stock Exchange.Loan servicing has improved significantly in the past four months, helped by the threat to expose defaulters.