Education Loans in Nepal: Your Gateway to Study Abroad

The Importance Of Education Loans To Nepali Students

Studying overseas comes with a hefty cost. Many Nepali students seeking to study abroad, at popular destinations like the US, UK, and Australia which cost approximately $20,000 to $50,000 tuition yearly, have to resort to taking education loans.

The financial bottleneck remains one of the most significant barriers against free movement among students from Nepal. The number of students going abroad increased by 35% between 2018 to 2023.

Different Types Of Educational Loans In Nepal 

Commercial Banks And Other Financial Institutions Loans 

Nepal has a number of commercial banks which provide education loans to international students. Typical these cover: 

• Tuition 

• Accommodation 

• Tickets 

• Books 

• Insurance

 The major providers include:  

1. NIBL: Nepal Investment Bank Limited  

NIBL gives up to NPR 10 Million and has interest rates starting from 10.5% per annum. Their “Global Education Loan” plan is meant for students showered in options wishing to study in Australia and Canada, UK, USA, and so forth.   

2. NIC Asia Bank  

NIC Asia’s “Abroad Study Loan” offers funding of up to NPR 15 Million and repayment is allowed only after course completion, up to 10 years. Their general interest range sits at 11-12 % of per annum. 

3. Nabil Bank

With their education loan scheme, a student is eligible to receive up to NPR 12 million and can receive funds based on semester-wise fee requirements. Interest rates start from 10.75%.

Government-Backed Loan Schemes  

These types of loans are available only through the ministry of education. The loan amount is generally lower (max ύ100000) but the interest rates and repayment options are more flexible.  

Education Loan Eligibility Requirements in Nepal

Basic Eligibility Criteria

1. Citizenship of Nepal is mandatory.   

2. 18 to 35 years of age.   

3. Admission letter from any foreign university.   

4. Must have scored 60% or equivalent in the highest degree.  

5. Provide a means to show financial necessity.  

Collateral Requirements  

 Every bank in Nepal mandatorly requires these types of loans to be secured with collateral. Popular options include but are not limited:   

• Land and property (most common)   

• Fixed deposits   

• Government securities   

• Life insurance policies with surrender value    

Additionally, some banks are more flexible with collateral by allowing third-party sponsors.

Co-Applicant Information

A parent or guardian whom the bank lends considers a co-applicant is usually a dependable individual who fulfills the following requirements. 

• Proof of stable income 

• Age lesser than or equal to 60 years 

• Maintains a positive credit score 

• A citizen of Nepal

How to Get an Education Loan in Nepal: Step-by-Step Guide  

1. Compare the Services of Multiple Loan Providers 

Examine how different banks are competing with one another. Don’t forget to include: 

• Chargeable interest on the loan 

• Loan ceiling limits 

• Repayment terms 

• Administration expenses 

• Necessity of insurances 

Identify a bank that suits your needs and formulate a needs-assessment worksheet.

2. Secure University Admission

In order to obtain a loan, you must receive an acceptance letter from your desired university. For every loan, this is a mandatory document.

3. Assemble Necessary Paperwork

Accomplish the following student-related documents before visiting the bank:

Student Documents:

• Birth certificate (original and copy) 

• “O” Level and “A” Level certificates with transcripts (If applicable) 

• Certificates for standardized examinations (IELTS/TOEFL, GRE/GMAT) 

• Costs breakdown 

• Passport 

• Visa (if available, otherwise stated) 

• Reason for the application 

• CV

Co-applicant/Guarantor Documents:

• Proof of citizenship

• Proof of income (Salary slips, Self-employment verification)

• Bank documents (last 6 months) 

• Employment history

Collateral Documentation:

• Proof of ownership  

• Recent valuation certificates   

• Land revenue receipts 

• Cadastral maps  

• Certificates of no objection from family members, if made common property

4. Submit Application for the Education Loan 

Go to your preferred choice of the bank and submit the application there. Make sure you can handle: 

• Completion of the application form(s)

• Opening interview

• Examination of property

• Evaluation of credit ratings

Depending on the bank and how well put together your documentation is, the average period for processing these requests is between 2-4 weeks.

5. Accepting Loans and Payments

When the loan is sanctioned make sure you

• Complete and sign of course the relevant documents for the repayable loan secured by the property

• Register the mortgage of the collateral

• Give instructions for the loan to be paid out

• Insurance arrangements (if needed)

During most banks, the loan is paid directly to the school and not the depositing student.

Interest Rates and Terms of Payment

Contemporary Context of Interest Rates

The educational loan interest rates in Nepal are currently between 10.5% to 13.5% per year. These tend to be:

• Adjustable (attached to base rate)  

• Reviewed once every three months 

• Open to renegotiation for premium clients

Ways to Arrange Payment

Most banks in Nepal provide a flexible manner of arranging repayment:  

1. Lag Period: Students in most cases do not have to make any payments during the study period plus six months. 

2. Payments During Study: Some banks permit payments during studies to be made on an interest-only basis. 

3. Complete Payment Term: Usually is estimated to be within the range of 5 to 10 years after the grace period. 

4. Early Repayment: Most of the banks offer early repayment options without penalties.

Sample Calculation

Considering a loan of NPR 8 million at an 11% interest rate with a repayment period of 7 years: 

• One month’s payment: Roughly NPR 132,000  

• Net interest expenses: Roughly NPR 3.1 million

Special Considerations for Different Study Destinations

Australia:

• Greater amount available for the loan (up to NPR 15 million) 

• Expenses for living also need to be considered (around AUD 21,000 yearly) 

• Banks may need to have GIC (Guaranteed Investment Certificate) confirmation

United States:

• Available for the greatest loans with the higher tuition expense 

• Greater loan amounts tend to require scholarships or assistant positions for endorsement 

• Submission of an I-20 form may be required for verification

United Kingdom:

• Available for the lowest overall loan requirements due to shorter loan termed courses (usually 1-year Masters) 

• Work rights after Brexit may affect repayment strategy 

• Most banks have quicker processing for students heading to the UK

Conclusion

Considering the fact that at some point in life a student will have to come face to face with educational loans, chances are high it will come out to be one the largest loans a student will take. Therefore, offer the loan comes with benefits, approach the loan smartly:

1. Borrow what you need, not what you can get
2. Find out if the services in a city where you plan to go for further studies is in need of fresh graduates, as well as the average remuneration.
3. Assess the expected return on investment.
4. Assess if it will compromise the family’s finances.
5. Have alternative plans in case of an economic crisis.

Education loans have become a popular topic of discussion among students and with the right financial aid, an international education cease being a fairy tale and becomes a reality.

FAQs 

Is it possible to take an education loan in Nepal without collateral?

At present, education loans granted without collateral are highly uncommon in Nepal. Some institutions provide a small sum with no property collateral but instead ask for fixed deposits or government securities as collateral.

How long do I have to wait for loan approval?

Wait time varies but usually you can expect results between 2¬–4 weeks upon submission of all documents. Verification of property documents can push results back however.

Is it possible to apply for the loan once my visa has been issued?

You can, but it is a dangerous move. Documentation processing will take some time, and in most cases you will need to prove that you have the funds available for a visa. Make sure to begin the loan application right after you receive your acceptance letter.

What happens if I fail to comply with the repayment terms?

A legal course of action may be taken against you, so do not shy away from confronting your bank, as they might claim the collateral property. Please remember to negotiate with the bank because most offer various restructuring tools.

May I apply for a loan that would go toward living costs only?

In most cases, tuition is a prerequisite; however, the sustenance of comprehensive education loan widens its scope to living expenses, which would be folded into the overall total.