Education Loan in Nepal: Current Scenario, Eligibility and Process

Along with the rising everyday expenses, the cost of pursuing education in Nepal has also increased significantly. Nowadays, educational expenditure have become a festering financial burden for every family.

So, along with the knowledge and hard work, Nepali students are obliged to have financial support to pursue a course of their choice and secure a great education.

Apart from financial burden, lack of quality education, limited employment opportunities, a high degree of political instability and disrupted socio-economic conditions due to earthquakes have shown disastrous on the Nepali education system.

These factors have eventually impacted the students and incited them to migrate to foreign countries for pursuing a proper educational career, even though the abroad studies are anchored with a high cost of living and hefty migration expenses.

Now, Nepal is one of the top nations with the majority student population studying abroad and the number is increasing year on year. India, Australia, the United States and the United Kingdom are the preferred destinations for the Nepali students.

Major Destination Countries of Nepali Students (2018-19)

Nepali student Migration in Numbers:

• According to the report by International Organization for Migration (IOM), 84,700 Nepalis were studying abroad in 2016.
• The number of Nepali students in the US and Australia has increased by 20% and 60% in 2016-17, respectively.
• A total of 31,157 Nepalis were issued student visas in Australia in the year 2017-18.
• In 2018-19, the Nepali Government has issued 63,259 “No Objection Certificates”, according to Ministry of Education, Science and Technology (MOEST).

In the recent decade, the student migration in Nepal has experienced a sharp rise with a nearly six-fold increase in the FY 2018-19.

Let’s have a look at the rise in Nepali student migration in the last 10 years

Even though the outbound student mobility from Nepal is incessantly increasing at a high rate, many students hadn’t obtained education loans to fund their education and other expenses.

This is mainly because the educational loans in Nepal require collateral, complex documentation procedures and high-interest rates.

In view of this, the Nepali Government banks and other financial institutions have eased the education loan process and provided competitive schemes for Nepali students for a better educational career.

Education Loan in Nepal – How it Helps?

Education loan in Nepal is financial support for the students aspiring for higher studies in Nepal as well as abroad. The purpose of the loan is meant to cover all expenses incurred during the completion of a course. It includes:

• College/school/hostel expenses
• Examination and library expenses
• Cost of computers, books, and other aids necessary for completion of the course
• Travel expenses
• Health insurance

Apart from covering the educational expenses, education loan offers many benefits. A few of them are:

• Lower Interest Rate
• Flexible Payment Terms
• Flexible Loan Options
• Easy Repayment options
• Tax Benefits

However, to avail the aforementioned benefits of education loan in Nepal, the applicants must meet certain criteria and accept a few terms and conditions set by the loan provider.

If you are looking to know how to apply for an education loan in Nepal to pursue further studies in the nation or in abroad, here are few key takeaways about the loan application, approval and related services.

Eligibility:

• The applicant must be a Nepali citizen
• The applicant must have at least 10+2 level education qualification
• The applicant must have a confirmation of admission from the respective education institution
• The applicant’s parents/guardian/spouse must have a regular income for repayment of installments
• The applicant must be at least 18 years old
• The applicant must have collateral security or fixed deposits

Eligible Courses: Nepali banks provide educational loans for almost any course provided that the concerned educational institute is recognized by Nepali Government.  The eligible courses include:

• Undergraduate/Bachelors & above
• Graduate/Masters & above
• Any Professional Courses (graduate and above)

Required Documents:
Supportive documents required for the educational loan approval in Nepal include:

Note: Documents listed above are just some of the banks’ requirement and the list may vary as per their rules and regulations.

There are many banks in Nepal that provide educational loans to aspiring students. But, it’s imperative for the students to compare the study loan on various parameters, terms and conditions.

Also Read: Foreign Currency Exchange Rates in Nepal

The applicant should make sure to understand details like total loan cost, monthly installments, interest rate, loan processing fees, subsidies, grace period, term period, loan processing time, repayment scheme, moratorium period and so on.

So, the students are obliged to look into several banks and do some research regarding the application process.

Let’s have a look at some of the prominent banks that offer study loans in Nepal:

1) Bank of Kathmandu:

Loan Amount:

• Minimum: NPR 150,000/-
• Maximum: NPR 10,000,000/-

Financing %:

• Up to 90% of institute and accommodation expenses. In case, if the student is looking for MBBS/MD courses in Nepal, then the amount can be up to 100% of the total tuition fees. However, the amount should not cross 90% of the total cost of the course.
• In addition, the loan will not be allowed above NPR 1,000,000/- for other expenses such as travel, books and computer.

Tenure: Up to 10 years (Exclusive of moratorium period of 12 months)
Repayment: EMI based
Interest Rate: Base Rate + 0.50 to 6.00

2) Citizens Bank Limited

• Loan Amount: Maximum up to NPR 5 million.
• Loan Portion: Up to 100% of the cost of education but not above 80% of the Distress Value of collateral security
• Tenure: Maximum of 15 years including moratorium period
• Repayment: Terminating loan payable in EMI

3) Everest Bank Limited

• Loan Amount: The amount of loan will be approved as per the costs incurred during the course and expected earnings after the course.
• Disbursement: Loan is disbursed as a term loan. The annual limit will be calculated based on the costs incurred during the course within the overall limit and the disbursement is made accordingly.
• Security: Collateral security or fixed deposit equivalent to 100% of the loan amount acceptable to the Bank.

Note: Students who are applying educational loan for MBBS/BDS studies in Nepal can avail “Sanjivani Education loan Scheme” provided by the bank.

4) Civil Bank

• Tenure: Up to 10 years (including a grace period of up to 3 years)
• Repayment: EMI Based

5) Nepal Investment Bank Limited

• Tenure: Maximum up to 10 years
• Repayment: EMI based

Fees and Charges:

• Unscheduled payment: 1.5% of the payment amount.
• Management fee: 0.50% of the loan amount or NPR 5,000 (whichever is higher)
• CIC Charge: on actual basis

6) Machhapuchchree Bank Limited

Loan Amount-

• Minimum: NPR 200,000/-
• Maximum: NPR 6,000,000/-

Financing %: Up to 70% of Fair Market Value of real estate collateral or 80% of total education expenses.
Tenure: Maximum 12 years (including 2 years moratorium period)
Loan processing fee: 1% of the loan amount
Repayment: EMI based

7) Nabil Bank Limited

• Loan Amount: Up to NPR 10 million
• Financing %: Study loan is also available up to 90% of the principal amount of the deposits
• Tenure: Up to 15 years
• Moratorium period: Maximum 4 years or course duration whichever is earlier

8) Nepal SBI Bank Limited

• Loan Amount: Maximum up to NPR 80 Lakhs
• Moratorium Period: Maximum period of 5 years or 3 months after the completion of course designated (whichever is earlier).
• Tenure: Maximum up to 10 years after the moratorium period
• Repayment: EMI based
• Security: Land and building having a value of at least 110.00% of the loan amount or up to 95% of the Fixed Deposit/Government securities

9) NMB Bank Limited

• Loan Amount: Up to 70% of the Fair Market Value of the collateral security as valued by the Bank’s approved value.
• Financing ratio: Up to 90%
• Tenure: Maximum up to 10 years
• Repayment:  EMI based

10) Laxmi Bank

• Loan Amount: Maximum of NPR 7 million
• Financing %: 75% of FMV of the property or 95% of the value of Fixed Deposit or Government Bond
• Loan Tenure: 15 years

11) Prabhu Bank Limited

Loan Amount :

• Minimum: NPR 100,000/-
• Maximum: NPR 5 Million/-

Financing %:  Up to 90% of the Distress Value subject to the maximum loan limit
Tenure: Maximum of 15 years
Loan Fee: Management Fee of 1% of the sanctioned loan amount
Repayment: EMI based

12) Sanima Bank Limited

• Loan Amount: Maximum up to NPR 10 million
• Tenure: Up to 15 Years (including moratorium period)
• Service Charge: 1% on the approved loan limit

13) Siddhartha Bank Limited

• Loan Amount: Maximum up to 80% of the total expenses to be incurred for the proposed study
• Tenure: Maximum up to 10 years (In case of Term Loan including moratorium period)
• Security: Land and building with at least a 40% margin or mortgage of land

14) Standard Chartered Bank Limited

Loan Amount:

• Minimum: NPR 1 million
• Maximum: Up to NPR 10 million

Tenure: Minimum 1 year and maximum up to 10 years
Moratorium Period: Up to a maximum of 3 years or course duration (Whichever is earlier)
Repayment: EMI basis after the moratorium period

Other leading banks include:

• Himalayan Bank Limited
• Mega Bank Limited
• NCC Bank
• Kumari Bank Limited
• Prime Bank Limited

Note: Before reaching out for the banks for an education loan application, check if you can apply it online so that you can save much of your time.

Many times, banks are willing to offer a loan amount higher than what you need. But, you may not need to accept the entire loan amount since you have to pay back the loan with interest. So, it is ideal to borrow what you need.

Summary

Before choosing an education loan, it’s imperative for the Nepali students to check whether any form of scholarship is available for them or not. Because, many colleges in Nepal are offering merit-based, need-based, as well as extracurricular scholarships.

So, it is highly recommended to find whether you are eligible for any scholarships and apply wherever possible.

Stay tuned to NepaliSansar.com for more latest education news updates!

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