Received November 13, 2018; Revised December 18, 2018; Accepted December 19, 2018

Abstract: Applying a documentary approach, this study sought to find out a sustainable higher education financing mechanism for Rwanda based on human capital theory, which postulates a positive relationship between the levels of education, the main way of acquiring human capital, and labour productivity. That means higher levels of education, ceteris paribus, contribute more to economic growth than lower levels of schooling, hence contradicting previous studies on low-income economies that placed heavy emphasis on investing in primary education, partly due to the primary sector orientation of these economies and high rates of returns associated with the primary schooling. The study established that Rwanda is committed to invest in higher levels of education. However, despite this interest to invest in higher levels of education, findings revealed that for Rwanda the government budget allocated to that sub-section is still a major constraint. This study recommends creation of an education bank loan.