The Court of Appeal’s recent intervention in the ongoing university funding dispute in Kenya has further complicated an already volatile situation. On March 26, 2025, the appellate court suspended the High Court’s ruling that had previously declared the Variable Scholarship Loan Funding (VSLF) model unconstitutional. This decision temporarily reinstated the controversial funding framework, allowing the government to resume its implementation while the appeal is heard. The suspension was granted based on arguments from the Higher Education Loans Board (HELB) and the Universities Fund (UF), both of which warned that halting the VSLF model would cripple their ability to allocate funds, potentially leading to financial instability and even the closure of multiple institutions. Former HELB Acting CEO Mary Muchoki emphasized in an affidavit that the High Court’s ruling could result in the indefinite closure of universities, underscoring the gravity of the situation. Similarly, former Universities Fund CEO Geoffrey Monari defended the VSLF model as a more equitable and cost-effective funding mechanism, cautioning that the previous decision could trigger a crisis in university financing. By suspending the High Court’s ruling, the Court of Appeal sought to balance the urgent need to sustain university funding with the concerns raised regarding the legality and fairness of the model. However, this move introduces another layer of uncertainty, as universities, students, and policymakers must now navigate an unpredictable legal landscape while awaiting a final resolution.

To mitigate the immediate fallout and provide transparency, the Court of Appeal issued several directives aimed at ensuring that students, universities, and other stakeholders remain informed about the potential implications of the ongoing legal battle. The court instructed the Attorney General, HELB, and the Kenya Universities and Colleges Central Placement Service (KUCCPS) to disseminate detailed information about the VSLF model to all relevant parties within 14 days. This included clear communication to current beneficiaries and prospective applicants that the funding framework could still be subject to further changes. Additionally, the appellate court mandated the establishment of an appeals mechanism within the same timeframe, allowing students dissatisfied with their funding allocations or categorization to seek redress. These directives were an attempt to address the concerns raised by the High Court regarding the lack of transparency and due process in the implementation of the VSLF model. Nonetheless, the broader financial challenges facing Kenyan universities persist, as public institutions continue to struggle with substantial funding deficits while private universities remain burdened by unpaid government sponsorship funds. Although the temporary reinstatement of the VSLF model might alleviate some immediate financial pressures, the long-term sustainability of higher education funding in Kenya remains a pressing issue that requires a more comprehensive and permanent solution. The shift towards increased household contributions under the VSLF model raises additional concerns about affordability, particularly for students from low-income backgrounds, who now face the prospect of significant debt accumulation through student loans.

The current funding controversy is part of a broader historical shift in Kenya’s higher education financing strategy, transitioning from the Differentiated Unit Cost (DUC) model, which had been in place since 1995, to a more individualized, means-tested approach. Under the DUC model, public universities received block funding based on student enrollment and the costs associated with different academic programs, with the government initially expected to cover 80% of the unit cost. However, persistent underfunding led to financial distress for universities, necessitating alternative approaches. In May 2023, the government introduced the VSLF model, which sought to provide direct funding to students through a combination of scholarships, loans, and household contributions, assessed via a Means Testing Instrument (MTI). While this shift was designed to target financial aid to the most economically vulnerable students and encourage universities to diversify their revenue sources, it has sparked concerns about access and equity. The ongoing legal uncertainties surrounding the VSLF model have further exacerbated these concerns, as students remain unsure about their financial obligations, and universities continue to grapple with inconsistent funding. Moving forward, Kenya must establish a stable, transparent, and equitable university financing system that balances institutional sustainability with student accessibility. This requires strengthening legal frameworks, improving the MTI to ensure fairness, enhancing government investment, and exploring diversified funding sources such as public-private partnerships and alumni contributions. Without such reforms, the country risks entrenching financial instability in its higher education sector, limiting opportunities for students, and undermining national development objectives.

References:

Jijuze Impact of Kenya’s Court Decision on University Funding

The Standard Court of Appeal suspends ruling on university funding model

Kenya News Agency Govt reaffirms commitment to new varsity funding model

All Africa Kenya: COA Temporarily Allows Impementation of New University Funding Model