Graduates receiving higher education loans starting this September could see up to 25 percent deducted from their salaries under the newly proposed Tertiary Education, Placement and Funding Bill, 2026.
Clause 49(4) of the legislation caps these deductions at a maximum of 25 percent of an employee’s earnings. Under the framework, the upcoming Tertiary Education Funding Authority (TEFA), which will replace the Higher Education Loans Board (HELB), will manage the recovery process.
“In making deductions for loan repayment, the Authority shall deduct not more than twenty-five percent of the loanee’s emoluments,” the bill states.
This framework rolls out alongside a broader government initiative to provide full funding for university and college students starting in September 2026. President William Ruto notes that every qualifying student will secure full state sponsorship. Moving forward, students will pay nothing upfront upon admission, as the government covers tuition and accommodation costs through comprehensive student loans.
Borrowers must begin repaying these loans, alongside any accrued interest and applicable charges, within one year after completing their studies. Newly employed graduates will also need to disclose their loan status to their employers right away.
The legislation places strict legal obligations on employers, requiring them to track and deduct loan repayments monthly and notify TEFA in writing upon hiring a borrower. Companies must forward these collections to the authority within nine days after the close of each month. Failing to remit collected funds will trigger stiff penalties, hitting non-compliant businesses with a five percent monthly surcharge on the total unremitted amount.
“Every employer of a loanee shall upon employment of a loanee, inform the Authority in writing or in such other manner as the Authority may specify, deduct from the emoluments of the loanee such monthly deductions as may be determined by the Authority until payment in full or exit from their employment whichever is earlier; and remit such deductions within nine days after the end of each month,” the bill states.
“The Authority shall charge an employer who, after making a deduction from the employee emolument, fails to remit the deductions to the Authority within the prescribed period, a sum equal to five percent of the total amount of the repayment for each month or part of the month that the repayment remains unpaid,” it adds.
