The objective of this assignment was to establish the determination of the proper interest and administration fees that the HELB should levy on each loan product that it offers as cost of higher education. In order to establish the correct interest for a sustainable Revolving Fund the assignment focused on determining the demand side of university education by focusing on the cost of courses offered at the universities and the cost of living for undergraduate students. The assignment also established the supply side of financing the university education by focusing on the sources of funding of higher education such as university scholarships, bursaries and loans; and finally it established the sustainability of the HELB revolving fund.  The main aim is to provide a way forward in regard to University Education Financing.

CDCL undertook the total assignment and established

1. Demand side appetite for University Education in Kenya;
2. Supply side provision of funding of University education in Kenya; and
3. Establishing the cost of Funds for HELB funds; and
4. Proposals of a Sustainable model for Financing TIVET and University Education in this country.

On the Sustainability of the HELB Revolving Fund the following key areas were identified to ensure long term sustainability of HELB:

1. Establishing a “benchmark Cost of Funds”. Recommended that the Board of Directors establish a minimum acceptable return on investment over the cost of running the Fund as a key benchmark in establishing the ‘cost of Funds’;
2. Recommended the restructuring of HELB into Operational Units that will serve specific purposes and which will increase focus and accountability for the long term sustainability challenges that may portend. Key to these will be the establishment of “
   1. EDUBANK – A commercial banking institutions focused on funding tertiary education and which raise its liabilities from issuing special purpose bonds and collection of current loans. The Bank will be based on equal risk for key costs required by students not covered by direct concessional funds of Government.
   2. The Concessional [needs based] support will be separately adjudicated to cover cost of living and other support funds required by poor students. These funds will be financed from a concessional pool capturing cost of funds as established without a commercial return.
   3. A Special Debt Collection Unit will be created to focus on collecting historical and poorly performing debts so that sufficient energy and focus is sustained to ensure results;
   4. The Creation of an Advisory Unit that can fun itself through the provision of governance and consultancy fees for the above units as well as act as a key interface to support private sector finance for Higher Education using the legal framework that HELB enjoys to facilitate further financing.