Private universities have turned away many government-sponsored students, citing poor funding.
Students admitted for courses such as law, pharmacy and clinical medicine were told to go back home when they reported for admission.
The problem has been reported in at least 28 universities.
The institutions referred the affected students back to the Kenya Universities and Colleges Central Placement Service.
At Kabarak University, tens of parents protested outside the main campus gate when the learners were denied admission.
The students were placed in the institutions by KUCCPS on a government-sponsorship basis after surpassing the cut-off points for the courses in the Kenya Certificate of Secondary Education examination.
“We were told that the government paid Sh70,000 yet a course like medicine requires more than Sh200,000 per student. We fail to understand why KUCCPS placed our children here if it knew fees would not be paid,” Mr Edwin Sitienei complained.
KUCCPS chief executive John Muraguri admitted that the universities referred the students to the agency, adding that the matter was being addressed.
“What the universities did was in order, considering the circumstances, because they expected the government to increase funding for the students,” Mr Muraguri said.
The CEO added that the students had been placed in the institutions but funding affected the programme.
“We have communicated with the affected students and asked them to apply for other courses offered by public universities. We will place them once an agreement is reached,” Mr Muraguri said.
Angry parents, however, blamed KUCCPS for the turn of events and threatened to storm its city offices if their concerns were not addressed.
“It is very painful because some of us have sold land and other properties to bring our children here. Now we are being told to pay what we cannot afford,” Mr David Kurgat said.
His son, who scored an A- in the KCSE examination, and was placed at the university to study pharmacy.
Mr Kurgat said his son had applied for admission to a public university but was placed at Kabarak.
Vice-Chancellor Henry Kiplagat said the university had addressed the matter with the KUCCPS.
“We have already admitted more than 1,200 government-sponsored students successfully.
For those affected, the matter is being handled by KUCCPS,” Dr Kiplagat said.