The Government is exploring ways in which private universities can enrol State-funded students.
Education Cabinet Secretary Fred Matiang'i said the 31 public universities cannot absorb all students who attain the minimum university entry grade.
Dr Matiang'i said the ministry, through the Kenya Universities and Colleges Central Placement Service (KUCCPS), was looking for ways of collaborating with private universities.
The CS said this year alone, only 74,000 students would be admitted to public universities because of the few available slots.
"Many more who attain the minimum entry mark of C+ may not get places," said Matiang'i.
This means that 91,378 of the 165,766 students who scored the minimum university entry grade of C+ and above have been locked out Government slots in public universities due to lack of space.
The CS was speaking during the inauguration of Prof Paul Zeleza, the new United States International University (USIU) vice chancellor.
He takes over from Freida Brown, who has since retired. Chief Justice Wily Mutunga attended the function.