Financing in education and loan system of Nepal (03)

The budgetary allocation for education loan, student loan has increased almost by 7 times in a decade’s time – from Rs.2079 million in 1990/91 to Rs.14073 million in 2001/02. The share of secondary education loan, student loan has shown consistent increase over all these years – from 14% in 1990/91 to almost 25% in 2001/02. The share of primary education level student loan, education loan has also marginally increased. It shows the importance of secondary education degree loan due to its gradual expansion as a result of improvement in the access and growing pressure from the primary education level pass-outs. Despite the emergence of private sector as a major service provider in the education loan sector, this pressure is likely to continue for some time due to increasing primary level pass-outs and enrollment rate – that is to say fewer drop outs. 

The resource allocation by MTEF shows that about 27% of total regular expenditure on educational degrees, education loan, student loans, online masters degree, online colleges, online degrees, education degrees, online university  sector will be for secondary educational degree, and in case of development expenditure, such proportion will be about 6%. Thus of the total budget on the educational degree sector, about 22% is allotted for secondary educational degree. It comes to little more than Rs.3 billion for a year for secondary educational degree.

Available data does not permit to allocate the estimated budget by their sources of finance. Some rough estimate suggests that more than 90% of the budget from the government source, and rest from the foreign assistance meet secondary educational degree. In some years, contribution of foreign assistance in secondary educational degree is quite negligible. In the 1990s, there was a project Secondary Education Development Project funded by DFID/UK and Asian Development Bank. From next July, the HMG/N is planning to launch Secondary Education Development Program (SESP) with loan 7 assistance from Asian Development Bank and grant from DANIDA. Total cost of the project is US$75 Million. It will increase the share of secondary educational degree in the budget allocation of educational loan.