Employers face 5pc penalty for failing to remit student loan deductions
Under the proposed law, an employer who employs a student loan beneficiary would be required to notify the Authority of the employee's employment.
On August 13, Kenya's proposed Tertiary Education, Placement and Funding Bill, 2026, outlines a penalty system for employers who deduct student loan repayments but fail to remit them on time. The penalty would be equivalent to five percent of the outstanding amount for each month, or part of a month, that the repayment is unpaid.
Under the Bill, employers must notify the new Tertiary Education Funding Authority of the employee's employment and deduct the monthly loan repayment from the employee's salary within nine days after the end of each month. If the employer fails to remit the repayment within the stipulated period, they would face the penalty. The Bill also states that the deductions would continue until the loan is fully repaid or the loanee leaves the employment, whichever comes first.
Repayment could be recovered as a civil debt, similar to current HELB requirements. The reforms aim to replace multiple existing boards with a single Tertiary Education Funding Authority, which would mobilize funds for student loans, administer scholarships, and recover loans from beneficiaries. The Bill proposes that students begin repaying their loans, along with interest and charges, within a year of completing their studies.
For graduates in formal employment, repayments would be through salary deductions, while informal workers would enter into a payment plan with the Authority. The proposed law caps loan repayment deductions at 25 percent of a loanee's emoluments. The Bill is currently under parliamentary consideration, and its provisions may change during the legislative process.
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