More than a lakh Nepali students leave for study abroad every year, and a large share of them fund it with a bank loan secured on the family's land or house. The loan itself is straightforward. The details around it, the No Objection Certificate, the moratorium, the exchange rate, are where families get caught. Here is the whole picture.
What the loan covers and how much
Banks finance tuition fees, living expenses, airfare and insurance, paid in instalments as the university invoices. Typical amounts run from Rs 20 lakh to Rs 1 crore, depending on the country and the collateral. Rough all-in costs per year at recent exchange rates:
| Destination | Tuition per year | Living per year | Total per year |
|---|---|---|---|
| Australia | AUD 25,000 to 40,000 (Rs 22 to 36 lakh) | AUD 21,000+ (Rs 19 lakh) | Rs 40 to 55 lakh |
| United Kingdom | GBP 15,000 to 25,000 (Rs 26 to 43 lakh) | GBP 12,000 (Rs 21 lakh) | Rs 45 to 65 lakh |
| United States | USD 20,000 to 50,000 (Rs 27 to 68 lakh) | USD 15,000 (Rs 20 lakh) | Rs 47 lakh to 90 lakh |
| Japan | JPY 700,000 to 1.5 million (Rs 6 to 14 lakh) | JPY 1.2 million (Rs 11 lakh) | Rs 17 to 25 lakh |
Most families borrow for the first year and part of the second, expecting part-time work to cover the rest. Banks know this and usually size the loan to the first-year total plus a margin.
Collateral: the family's land or house
Education loans in Nepal are almost always secured. The bank takes a mortgage on property owned by the student's parents or a close relative, who signs as guarantor. Expect:
- Lending of 50 to 70% of the property's distress valuation.
- The same title checks as a home loan: lalpurja, char killa, road access, tax receipts.
- The student as primary borrower and the parent as co-borrower, since the student has no income yet.
Unsecured education loans exist at a few banks for small amounts, typically under Rs 10 lakh and at a much higher premium. Gold can also be pledged; see our gold loan guide.
The NOC from the Ministry of Education
To send tuition abroad through a bank, you need a No Objection Letter from the Ministry of Education, Science and Technology. It is issued per institution and per programme, on submission of the offer letter, academic certificates, citizenship and a small fee. Without it the bank cannot remit foreign currency for your course, and Nepal Rastra Bank's foreign-exchange rules will block the payment.
The NOC is also what makes the loan "education" rather than "personal" in the bank's books, which earns you the lower education premium.
Moratorium: the repayment holiday
You do not pay EMIs while you study. Banks grant a moratorium equal to the course length plus 6 to 12 months to find work. What happens to interest during that period varies and matters enormously:
- Interest serviced monthly. The parents pay the interest, say Rs 30,000 a month on a Rs 40 lakh loan at 9%, while the principal waits. The cheapest option overall.
- Interest capitalised. Interest is added to the loan and repayment starts on the larger balance. Convenient, but a Rs 40 lakh loan can become Rs 50 lakh before the first EMI.
Ask which one applies. After the moratorium, the loan converts to a standard EMI loan over 5 to 10 years.
Interest rate and fees
Education loans are priced at base rate plus 2 to 4%, floating. Processing fees are usually 0.5 to 1%. Compare current rates on our education loan page. The government also runs a concessional education loan with interest subsidy, but it is for study inside Nepal and is capped at a few lakh rupees, so it does not help with a degree abroad.
The risk nobody explains: the exchange rate
Your loan is in rupees. Your fees are in dollars, pounds, Australian dollars or yen. Over the last decade the rupee lost roughly a third of its value against the US dollar. A course quoted at AUD 30,000 a year when you applied can cost Rs 3 to 4 lakh more by the second year if the rupee slides. Build a 10 to 15% cushion into the loan amount, or arrange for the bank to sanction a limit you draw only as needed.
The reverse applies to repayment. If the graduate works abroad and earns in foreign currency, a weaker rupee makes the rupee EMI cheaper in real terms.
Documents to prepare
Beyond the property and identity papers in our home loan checklist, bring: the offer letter or CoE, the fee schedule, academic transcripts, IELTS or equivalent score, passport, the NOC, and, for the parent, income proof. Banks also issue a loan sanction letter that embassies accept as proof of funds for the visa.
Use the education loan calculator to see the moratorium interest and the EMI after graduation, then check which banks match your collateral and country in our eligibility tool.