The Rs 138 Billion Question: How Nepal's Students Are Financing Their Education Abroad

The Rs 138 Billion Question: How Nepal's Students Are Financing Their Education Abroad

Nepal spent over Rs 138 billion on overseas education in one year alone. Here's the complete, data-backed breakdown of education loans, government subsidies, and which provinces are driving Nepal's study-abroad boom.

Every single day in Nepal, roughly 500 students apply for a document that allows them to legally send money abroad for their education. That single number repeated 365 days a year is quietly reshaping the country's banking sector, its foreign currency reserves, and the financial planning of hundreds of thousands of families. Let's break down exactly how big this trend has become, how students are funding it, and where in Nepal this money is actually coming from.

The Scale: Billions Leaving the Country Every Year

Let's start with the raw numbers from Nepal Rastra Bank (NRB), because they tell a story of relentless, consistent growth:

- FY 2018-19: Rs 46.32 billion spent on overseas education

- FY 2019-20: Rs 25.81 billion (a dip, largely due to Covid-19 travel restrictions)

- FY 2021-22: Rs 67.70 billion

- FY 2022-23: Rs 100.42 billion crossing the Rs 100 billion mark for the first time

- FY 2023-24: Rs 125.13 billion

- FY 2024-25: Rs 138.48 billion

And the trend hasn't slowed down in the current fiscal year either in just the first eight months (mid-July to mid-March), Nepalis spent Rs 93.89 billion in foreign currency on overseas education, up 8% year-on-year from Rs 85.86 billion in the same period a year earlier. After subtracting what foreign students spend studying in Nepal (a comparatively small Rs 4.10 billion), the net outflow for those eight months alone was Rs 92.89 billion.

To put that in perspective: that's money leaving Nepal's banking system every single year at a scale larger than many national infrastructure budgets driven almost entirely by individual families making education financing decisions.

How Many Students Are We Talking About?

The Ministry of Education, Science and Technology (MoEST) requires every student to obtain a No Objection Certificate (NOC) before a bank can legally transfer tuition or living expenses abroad. This makes NOC data the most reliable proxy for how many students are actually leaving.

- FY 2023-24: 112,593 NOCs issued — a record high

- FY 2022-23: 110,217 NOCs

- FY 2018-19: 63,295 NOCs (less than half the recent figure)

- Even during the pandemic low of FY 2020-21, 27,900 NOCs were still issued

Based on current trends, over 100,000 Nepali students now leave the country annually for higher education roughly one in every 50 students in the national student population, according to MoEST's Department of Foreign Education.

Province-Wise: Where Is This Money Actually Coming From?

This is where it gets interesting for understanding Nepal's regional financial patterns. While MoEST doesn't publish a clean province-by-province NOC breakdown every year, a detailed academic study on Nepal's higher education system found a striking concentration pattern that closely mirrors where study-abroad demand originates:

- Bagmati Province (home to Kathmandu Valley) accounted for 47.3% of national higher-education enrollment in 2013, peaked at 53.9% in 2016, and still held 44.0% of enrollment as of 2023 nearly half of the entire country's higher-education activity concentrated in one province.

- Youth literacy rates (ages 15–24) also vary sharply by province, which shapes both domestic enrollment and outbound demand: Gandaki Province leads at 95%, followed by Bagmati at 93% and Koshi Province at 91%. Lumbini and Sudurpaschim Provinces sit at 85%, while Karnali Province trails at 82% the lowest in the country.

- Since NOC applications overwhelmingly funnel through Kathmandu-based consultancies and banks, students from Bagmati and Gandaki provinces with their higher literacy bases and denser banking infrastructure remain disproportionately represented among outbound applicants, while provinces like Karnali and Madhesh continue to lag both in enrollment share and, consequently, in loan and remittance-linked education financing.

This regional imbalance matters financially: it means education loan products, NOC facilitation services, and foreign exchange demand remain heavily concentrated in and around the Kathmandu Valley, even though the aspiration to study abroad is nationwide.

How Are Families Actually Paying for This?

Very few families can pay these costs in cash, which is where education loans come in:

- Nepal's government runs a subsidized education loan scheme, reimbursing banks for a portion of the interest charged to eligible students. As of one recent report, Rs 75.40 billion had been disbursed to 92,204 borrowers under this scheme, with the government spending Rs 28.49 billion covering interest subsidies through a dedicated account at Nepal Rastra Bank.

- Among commercial banks, Rastriya Banijya Bank offers the lowest floating rate at 5.97% (up to NPR 80 lakhs, 15-year tenure, with a 12-month moratorium before repayment begins), followed by Global IME Bank (6.38%) and Everest Bank (6.45%).

- Most traditional education loans in Nepal still require collateral, typically land or property a major barrier for middle- and lower-income families, especially outside Bagmati and Gandaki provinces where property values and banking access differ significantly.

- Newer entrants like MPOWER Financing are beginning to offer collateral-free loans with no cosigner required, opening a path for students without inheritable property a genuinely new option in Nepal's lending landscape.

The Bigger Picture

Former National Planning Commission vice-chair Prakash Kumar Shrestha has pointed out that while overseas education contributes to human capital formation, Nepal currently has no clear policy to bring graduates back or make it easier for them to apply their foreign education within the country. Combined with the regional concentration data above, this paints a fuller picture: the country's most literate, most banked provinces are sending the most students abroad, spending record sums doing so, while the government's own five-year plan to make domestic education more competitive remains largely unimplemented.

What This Means for You

If you're a Nepali student or parent planning for overseas study, three things are worth doing before you commit:

1. Compare bank rates before choosing a lender the difference between 5.97% and a higher commercial rate compounds significantly over a 15-year loan tenure.

2. Check whether you qualify for the government's subsidized loan scheme before assuming you need a full commercial loan.

3. Ask about collateral-free options if your family doesn't have property to pledge this segment of the market is genuinely expanding.

Nepal's education-abroad economy has grown roughly 5x in six years from Rs 25.81 billion to Rs 138.48 billion. Understanding exactly how that money moves, who's financing it, and which regions are driving it isn't just useful for students it's a window into where Nepal's financial system is headed next.

Are you currently navigating an education loan in Nepal, or planning to study abroad? Share your experience in the comments it might help another reader make a better decision.