Financing Higher Education in Kenya: The Case of Student Loans
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Date
2003-05
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Addis Ababa University
Abstract
Student loans have become increasingly important in the financing of higher education in developing
countries. The objectives of this study are; i) to analyze the performance of the student loan scheme in Kenya, ii) to find out the characteristics of the beneficiaries and iii) determine the extent of government subsidy to the programme. The data used was extracted from records of the loans board and loan application forms.
The methods of analysis were adapted from Albrecht and Ziderman (1995) for the calculation of the
subsidy and loss to government, and Scott Long (1997) for the multinomial logistic estimation of the bursary and loan award determinants. Analysis for the determinants of loan and bursary award was done in two parts. The first part employed simple cross tabulation while the second part involved regression analysis. The results of the estimation indicated that region, income, expenditure, family status (orphaned) and number of siblings were significant in explaining the variations in amount of loan and/or bursary that a student would be awarded. Other important variables were residence (rural or urban) and father’s education.
The challenges to the management of the loan scheme include addressing issues of equity and
efficiency in funding universities, enhancing cost recovery and tapping of additional financial sources
other than the government. A number of policy recommendations arise from the conclusions. First,
resources should be directed to the most important fields of study. Second, students from the urban poor
should be given equal consideration as those from the rural areas in accessing funds for higher
education. Third, policies that encourage female students to enroll in the traditionally male-dominated
courses must be implemented to promote equity. Fourth, the means testing mechanism should be
tightened to ensure that only those who deserve loans and bursaries benefit. Lastly, financial assistance
should be strictly directed to the most needy students.
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Keywords
Human Resource Economiics, Human Resource