Pursuing higher education, whether in Nepal or abroad, is a dream for many students. However, the rising costs of tuition, accommodation, and other expenses make it difficult for many families to afford quality education. To bridge this gap, several banks and financial institutions in Nepal offer education loans. In this blog, we will provide a practical insight into education loans in Nepal, covering the eligibility criteria, loan terms, challenges, and solutions.
Firstly, I want to advice all the students or parents to be attentive throughout the process of loan processing because it seems to be a simple but it is not. So, one must go through all the research through different banks and get the education loan at best possible prices and through this blog will be helping you through the documentation process so, that your work will be hassle free.
Concept of Education Loan:
An education loan is a type of financial assistance (loan) provided by banks or financial institutions to students who need funding for their studies. It covers tuition fees, living expenses, books, and travel costs for those studying abroad. Mostly students travelling abroad for higher studies apply for education loan as the cost is higher in relation to study in Nepal.
Key Features of Education Loan:
- Amount of Loan: Mostly depends upon banking policy ranging from Rs. 500,000 to 10 million.
- Income Sources: There must be regular income source of the immediate family member or the sponsor so, bank have the guarantee of continuous installment repayment.
- Collateral requirement: Applicant must have a property to backup an education loan with proper real time valuation.
- Repayment Period: Can range from 5 to 15 years with some banks offering moratorium period.
- Service Charge: You need to pay certain amount of money as a service charge as per the rules and regulations of the bank for the loan processing.
- Interest rate: The base rate is the rate of interest decided by the Central Bank of Nepal and particular bank can add premium on base rate depending upon their policies.
Steps for Processing the Education Loan in Nepal
Step 1: Visit multiple banks to know about the terms and conditions about the loan and choose the best one according to your comfort and requirement.
Step 2: After choosing the bank, you need to apply for the loan giving all the details and reasoning for the loan application.
Step 3: Submit all the required documentation along with property valuation report. (|Property valuator must be registered and or associated to the bank from where you are applying for the loan amount.
(You must submit all the document at once so that you don’t have to visit the bank very often and your loan processing will be completed within 7 working days depending upon the bank rules and regulations.)
Step 4: After all the documentation done from your side and approval from bank, you need to visit the bank for signing the legal document upon the call from the bank and you need to pay the service charge for the loan processing according to the policy of the banks. While visiting, you need to take 2 people as the witness for the loan application as well as the guarantor/ sponsor for the loan amount.
Step 5: After signing the document, the documents signed by you is verified from bank side and after verifying all the documents the loan is sanctioned to you fully or partially as per decided in the beginning of the application of loan.
Eligibility Criteria for Processing Education Loan in Nepal
The student should possess the following eligibility criteria before processing the education loan:
- Should be a Nepalese citizen.
- Should have at least intermediate/higher secondary level (plus two) academic qualification.
- Should be between age of 18 years to 35 years in case of Diploma/Graduate/Professional/Vocational Courses and up to 40 years in case of Masters Equivalent and above Degree.
- Should have sufficient regular income to service interest during moratorium period. Their uncommitted monthly income should be at least 1.25 times of interest payable and the gross monthly income should be at least two times of the interest payable.
Eligible Courses for Education Loan in Nepal
The student can demand education loan for the following education levels:
- Diploma/Graduate/Masters and above
- Professional/Vocational Courses
Expenses considered for Education Loan in Nepal
These expenses are considered for education loan for the students in Nepal:
- Fees payable to College /Hostel (Admission fee, tuition fee, examination fee, laboratory fee, library fee, OSHC (Overseas Student Health Cover) and others, if any)
- Purchase of books, equipments, instruments required for the course
- Cost of passage (cost of journey for studies abroad) for both student and dependent in case he/she is accompanying the student.
- Boarding and lodging expenses (Recognized hostels by the institution) and living expenses for both student and dependent in case he/she is accompanying the student.
Documents Required for Education Loan in Nepal
The banks demand the following the following documents from the students and their respective guardian/sponsor for final processing of the student loan:
- Citizenship and photo of all the persons involved in loan processing
- Relationship verification certificate
- Offer letter/ admission letter from the college
- Copies of citizenship/pass port of the students and their parents.
- Other education certificates/ documents
- Schedule of expenses for the course.
- Copies of foreign exchange permit, where required.
- Property documents with valuation report
- Tax clearance certificates
- In case of foreign study Copy of documents required
- Income verification certificate with income statement as required by the bank.
So, these are the basic things and steps you need to know while processing for the education loan in Nepal and we hope this helps you throughout the process. And if you have any queries related to Education loan in Nepal just drop the questions below, we will try to make you clear on everything about it.