Nepal entered its formal education journey with the establishment of Durbar High School in 1854 AD (1910 BS) under the ruling Rana regime. Primarily serving the Rana elite, the school catered to under 1% of the country’s population. Though the school opened its doors for private citizens in 1902 AD (1959 BS), Nepal’s literacy rates remained below 5% for the rest of the Rana regime. However, following the ousting of the Rana regime in 1951 AD (2007 BS), the formalized education sector began to expand rapidly, with the number of schools growing from around 300 to over 8,000 in the next two decades.
The first private school in Nepal, Tribhuvan Adarsha School, was also established in 1951 AD (2007 BS), marking the beginning of an alternative education sector. Over time, families began to shift towards the private sector, foregoing a public school system that failed to adapt to growing public demand for quality education. Even today, we continue to see a shift in enrollment towards private institutions, despite their growing costs. In 2025/26 AD (2083/83 BS), 62.2% of students were enrolled in community schools, compared to 72% in 2019/20 AD (2077/78 BS). This shift is especially significant, as private schools currently make up about 24.8% of education institutions while serving about 37.8% of the student population.
Despite the expansion of the Nepali education system throughout the years, universal access to education, and a wholly accessible expansion of education systems still seem distant. This has led to the private sector’s expansion in the education sector, stemming from the gap in public education caused by a state that created a system that was not appropriately funded, monitored, updated, or invested in. Families in turn have to often shoulder a great financial burden, faced with affordability and quality education amid steep educational ambitions.
The Widening of the Public-Private Gap
The expansion of the education sector post-1951 coincided with the pursuit of political stability. The newly democratic country inherited a system with minimal teacher training infrastructure and little incentive in place to keep children in school beyond the primary level. In a joint report with the American Institute of Research, the National Institute for Research and Training reported that Nepal has consistently faced an “Educated and Unemployed” paradox, where a mismatch in the labor market demands and education outputs would possibly foster political instability.
Before the stability could be established, King Mahendra disbanded political parties and introduced the Panchayat System in Nepal in 1960 AD (2016 BS). The palace-centric government structure focused on expanding the education system to produce a productive workforce, rather than an informed population. At a time when political stability was most crucial, having a literate economy was more important than everybody completing secondary school to the government.
The rapid expansion of public schooling was not matched by teacher training, curriculum development, or funding. As time went on, and more schools were created, public schools experienced a severe teacher shortage. Due to stagnant teacher allocations spanning decades, as of 2023, an estimated 65,000 more teachers were needed to appropriately meet public school demand. Similarly, the public-school structure remained the same as enrollment pressure grew. Additionally, there is an absence of teacher incentives within the public school system. While calling for teachers who love teaching for the act and students is commendable, the lack of protocols, monitoring, and the role of the government in schools have led to “habitual absenteeism”, according to the Democracy Resource Center Nepal. Without a clear chain of command for who should appoint and later monitor teachers, locally or at the federal level, a frequent tension of teachers feeling micromanaged has come up.
Underlying the teacher shortage is a broader pattern of chronic underfunding. While Nepal’s government pledged to allocate up to 20% of the national budget to education in 2018 AD (2075 BS), less than half of that commitment has been consistently realized. A 13.92% allocation of the national budget in 2014/15 AD (2071/72 BS) had fallen to approximately 10.9% by 2024/25 AD (2081/82 BS). This has translated directly into unmaintained classrooms, outdated curricula, and a structural inability to compete with the private sector on observable fronts.
To continue filling the education vacuum created, private schools expanded capacity. By 2002 AD (2059 BS), after the seventh amendment to the Education Act, private schools could either register as not-for-profit educational trusts or for-profit business companies. Institutions began to build English-medium programs, offer holistic development-centered extracurriculars, and incorporate vocational training.
In time, this option between sending children to either public or private schools proved to be a more difficult choice as a quality gap in results emerged. By 2004 AD (2061 BS), School Leaving Certificate (SLC) results highlighted a gap in the passing rate, where private schools saw an average pass rate of 85% and public schools 38%. By 2019 AD (2075 BS), the performance gap still had not closed, as about 33% of private school students scored an A or above, compared to 4% of public-school students.
This may explain part of the significant investment in human capital Nepali families make. Across the wide range of province-dependent fees, an institutional school costs an average of NPR 3,305 a month, or NPR 39,660 annually per student. Weighted by the median national income of NPR 180,000, a Nepali family would spend about 22% of annual income on education, per child. Internationally, a 10% income spending benchmark is recommended.
However, the shift toward privatization has not been an equitable trend. The consequence of this widening gap falls on those without a choice. In 1996 AD (2053 BS), private school attendance was rare across all income levels, at about 17% of the richest attending, and 4% of the poorest households. By 2011 AD (2068 BS), 60% of students from the richest households attended private schools, while over 92% of the poorest households remained in public schools. The two-track system that began as an artifact of elite preference has turned into an economic outcome predictor, where where a child goes to school increasingly determines, rather than reflects, where they will end up.
The Problem Surrounding Privatization
Allowing institutions to legally profit from education provides private schools with a clear incentive to run education as business ventures. In the 2002 AD (2059 BS) Education Act Amendment, a framework was created to categorize private institutions into an A, B, C, or D category, as well as introduced a billable “miscellaneous fees” category for families. Schools would be appraised on their infrastructure, academics, teacher management, enrollment, and operational period, and the highest ‘scoring’ schools would be rewarded with a higher classification. Each classification level dictated a fee ceiling.
However, private schools have found different ways to circumvent the classification placed on them. In the name of new infrastructure, unique programs, and ‘exceptional’ student development, many Class A schools have been found to market themselves as a self-made “A+ Class.” In a world where quality education is constantly in high demand, parents that can afford the fee hike feel inclined to send students to this self-proclaimed A+ school, while those that cannot afford the hike are pushed elsewhere. Additionally, lower classified schools that could not afford to upgrade infrastructure to one like Class A schools were found to be merging classes (Class B with C or D, or Class C schools with D schools). These mergers to boost school classification and well as the emergence of Class A+ schools effectively reduced the number of affordable private schools available, leaving lower income households to attend public schools or invest most of their annual earnings in education.
Private schools have essentially unionized under organizations such as the Private and Boarding Schools’ Organization Nepal (PABSON) and the National Private and Boarding Schools’ Association Nepal (NPABSAN), which protest on behalf of private schools to the government. Most recently, in 2025 AD (2082 BS), PABSON and NPABSAN protested the government on a School Education Bill requiring a set number of full scholarships to be offered to students, and provide students all materials not manufactured by the school, free of charge (such as uniforms, books, and snacks).
Conclusion
The government of Nepal should regulate private schools better. However, the conditions that have created an education quality gap for private schools to fill (underfunded classrooms, insufficient teacher allocations, a performance gap) were created by the same government calling for stricter oversight. A set precedent of creating regulation and then not ensuring enforcement has contributed to PABSON and NPABSAN’s, albeit self-serving, resistance to regulation today.
A larger, more uncomfortable, question is not whether private schools should be better regulated, but whether Nepal’s public education system can offer a sufficient alternative if they were. A student pulled from an unaffordable private school in a more rural province, especially outside the Bagmati province, does not automatically have a resourced public one to land in.
This migration, from private to public, is more pushed presently. The government’s latest 3% equity tax on private schools is an additional financial burden on families barely affording to send their children to these institutions. A larger question looms: whether the public education sector is ready for the possible influx of students, on top of their already high student-teacher ratios (STR).
Nepal’s education crisis is not simply a private school problem. It is a governance problem that private schools have partially been circumvented in the past. In Part II of this NEFtake, we will examine what Nepal’s newest budget reveals about whether the government is prepared to address that underlying failure, or whether it is attempting to pull the weight of nationwide education from the private sector prematurely.
Ashley is a second-year student studying Economics at Pomona College. She is interested in data-driven approaches to economic development and public policy, with a special interest in education and immigration. Outside her current work at NEF, she is a Development Intern with the Texas Census Institute, works with Global Women Asia, and is a varsity athlete on Pomona-Pitzer’s Swim and Dive Team.
