A Sh40 billion bill left unpaid by the previous government has emerged as a major burden for private universities that educated students under government arrangements between 2016 and 2021, Treasury Cabinet Secretary John Mbadi has said.
Mbadi told the Senate Committee on Labour and Social Welfare that private universities have been seeking payment for years, with his office now faced with numerous claims from institutions that provided services but were not paid.
“I have huge files on my desk from private universities demanding payment for services provided between 2016 and 2021. It’s a substantial outstanding bill, as one university alone is owed Sh3 billion,” he said.
The Treasury CS said the government had repeatedly assured the institutions that they would be paid, but those commitments were not fulfilled.
“We have been living a lie, especially towards our private universities, because we promised to pay, but did not,” he told the committee.
His remarks came during a session focused on pension arrears affecting current and former Technical University of Kenya (TUK) employees. The discussion, however, brought out the wider financial difficulties facing universities, including unpaid bills owed to institutions and pension obligations to workers.
Mbadi said the financial problems facing TUK are part of a much larger challenge affecting universities across the country.
He said the government must rethink how it finances higher education, especially because many students depend on public support to remain in university.
“The issue of debt in our universities is a problem for the government, and we must now sober up as a country and have a conversation about how we can fund our universities,” he said.
The CS also pointed to the financial difficulties faced by families whose children depend on government assistance to pursue university education.
“Many of our children in universities come from poor backgrounds. We need to address this by having a conversation, both as a political class and as an executive, about how to fund our universities, because the truth is that we have been living a lie all these years.”
Universities say debt has grown
The Sh40 billion figure given by Mbadi relates to the debt as of 2021, but private universities say the amount owed by the government has continued to rise in subsequent years.
In November last year, the Kenya Association of Private Universities told MPs that its members were owed Sh58.8 billion in tuition fees.
Mbugua Ngari, who represented the association as its chairperson, said the unpaid money covered the 2016/17 to 2023/24 academic years.
The association said the prolonged delay in receiving the funds had placed private universities under financial strain and affected important areas such as research and innovation.
Universities told lawmakers that they had been forced to use their own money to continue teaching students who had been placed in their institutions by the government.
“The delayed disbursement of funds has forced private universities to dip into their reserves to finance the education of students placed with them by the government. This has financially crippled our institutions,” Ngari told the education committee.
The records presented to MPs showed that Mt Kenya University was owed Sh12.9 billion, making it the institution with the largest outstanding claim among those listed.
Kabarak University had an unpaid bill of Sh6.8 billion, while KCA University was owed Sh6.67 billion.
The Catholic University of East Africa had a claim of Sh4.3 billion.
The universities said the money was needed to meet their financial obligations after they had continued providing education to students despite not receiving the expected government payments.
HELB faces funding pressure
The private university debt has emerged as the government also seeks to address a wider funding problem in higher education.
Last month, President William Ruto announced that all qualifying university students would receive full government funding. The move suggested that the government could be looking at changes to the funding system introduced in 2023.
The announcement came amid growing pressure on the government to provide enough money for university students and institutions.
HELB also told MPs last month that thousands of students expected to join universities next month could face difficulties accessing financial support because of limited funds.
According to documents submitted by the board, 1,199,423 students will need financial support in the new financial year.
However, HELB has Sh56.71 billion available against a requirement of Sh114.36 billion.
The board said the gap has become a recurring problem, noting that it has operated below its required budget for the past four financial years.
HELB said the rising number of students seeking assistance has increased the pressure on its finances and called for urgent support from the Treasury.
The board has faced difficulties meeting its funding needs since the 2023/24 financial year.
Between the 2023/24 and 2025/26 financial years, HELB recorded a financial shortfall of Sh19.27 billion as budget deficits persisted.
The board's funding gap stood at Sh10.694 billion in the 2024/25 financial year.
It increased to Sh18.58 billion in the 2025/26 financial year, according to figures presented to MPs by Ngari.
The mounting obligations facing private universities, combined with pension arrears and HELB's funding shortages, have placed university financing at the centre of renewed debate.
Mbadi said the country needs to confront the problem and find a sustainable way of financing universities, particularly as more students from poor families depend on government assistance to access higher education.