Higher education is an investment in a nation's future, not a privilege reserved for those with collateral.
When I sought a loan to finance my B.A. LL.B. in Nepal, I assumed admission would be the hard part. It wasn't. Financing was — nine banks, and not one yes.
I visited commercial and government-owned banks across Kathmandu: Nabil, Rastriya Banijya, Global IME, Kumari, Siddhartha, Sanima, Nepal Bank, Agricultural Development Bank, and others. The answer was nearly identical everywhere: no education loan to study inside Nepal. One banker told me plainly, "Your best option is a home equity loan, or a personal loan."
That distinction matters more than it sounds. What Nepali banks market as an "education loan" is, almost without exception, built for students leaving the country – tuition in Sydney or Toronto, not Kathmandu. Where domestic financing exists at all, it is reserved narrowly for medicine and engineering. A law student has no product built for him. What was offered instead was a euphemism: pledge your family's land, and call it whatever helps it get approved.
I am not the only one who hit this wall. In fiscal year 2023/24 alone, more than 1,12,000 Nepali students obtained government permission to study abroad, roughly 500 applications a day. As of 2021, nearly one in five Nepali students pursuing higher education studied outside the country, compared with less than one in fifty in India or China. Officials at the ministry's own permit office have said openly that many applicants list "education" as their reason but privately intend never to return. A financing system that cannot serve students studying at home is, in effect, financing their departure instead.
Even where loans exist, they resemble ordinary secured lending, not student financing. Banks require land or buildings as collateral instead of recognizing future earning potential, and for many products repayment begins immediately rather than after graduation. For most students, these conditions defeat the purpose of the loan.
Nepal has tried to fix this twice before, and both attempts collapsed the same way.
In the FY2018/19 budget, the government announced loans of up to NPR 7,00,000 against academic certificates instead of land, with a partial interest subsidy. Bankers warned before it even launched that a certificate was worthless as security unless the government shared the lending risk. They were right: by mid-2019, only 10 applicants had been approved. Nepal Rastra Bank eventually mandated a minimum number of these loans per branch just to force compliance.
The idea did not fail. Its implementation did. And this isn't only history: Nepal Rastra Bank's own review this month found more than a dozen of its current policy commitments still stuck in the study phase, never implemented.
Other countries show this is solvable. The United States offers federal student loans without collateral, repaid against future income. Australia's HELP program collects nothing from graduates earning below roughly AUD 69,500 a year, and the government wrote off 20 percent of existing student debt balances outright in 2025. Kenya's HELB finances tuition and living costs with no collateral, government-guaranteed. Sri Lanka has run an interest-free loan scheme since 2017, absorbing the interest itself for the full 12-year term. Pakistan's national bank offers interest-free loans through its central bank. The Maldives covers tuition in full for a citizen's first bachelor's degree; enrollment has more than tripled since the scheme launched.
India offers the sharpest lesson, because it is the newest. Its PM-Vidyalaxmi scheme, approved in November 2024, gives collateral-free, guarantor-free loans up to ₹7.5 lakh, backed by a 75 percent government credit guarantee. As of last week, more than 1,12,000 loans had been sanctioned under it, worth over Rs 15,634 crore. This is precisely what Nepali bankers said was missing in 2018: a government willing to share the risk instead of asking for a certificate to carry it alone.
Nepal does not need to invent anything. It needs the same mechanism — a real government credit guarantee — paired with repayment that begins after graduation, not before it. This year's national budget quietly introduces a personal credit-scoring system for an unrelated purpose; there is no reason it couldn't eventually let a bank assess a law student on future earning potential instead of a father's land title.
Every student who abandons higher education, or leaves the country instead, is a loss Nepal absorbs quietly and permanently. This year's budget, the largest in the country's history, found new money for scholarships and made no mention of loan reform. Nepal has tried this before, twice, and quit both times while the paperwork was still being drafted. A third attempt funded, implemented, and enforced would not be a bold new policy. It would just be Nepal finally finishing what it started in 2016. The real question is whether Nepal is willing to invest in its students before asking them to invest in the country.