IMAGE: KCM
A UNIVERSITY degree is one of the most reckless bets many Nepali families will ever make. They pour cash into tuition and living expenses for years, often torching their savings or borrowing money. In return, they expect their children to land better jobs and earn enough to keep the household afloat. That bargain is now a risky gamble that more families are losing.
Nepal has expanded access to education and churned out a bigger pool of graduates. Yet its economy has failed spectacularly to create enough productive jobs for them. The upshot is an ugly combination: education still improves earning prospects on average, while a growing army of qualified young people struggle to find work that rewards their qualifications.
The numbers are less bleak than the whingeing of disillusioned graduates might suggest, but more troubling than colleges’ recruitment brochures imply. A 2024 study using Nepal’s 2017/18 Labour Force Survey estimated that a bachelor’s degree was associated with earnings 7.68% higher than the relevant baseline, rising to 11% for a master’s degree. These are estimates of the earnings premium associated with education, instead of guaranteed pay rises for individual graduates.
A separate study published in 2026 estimated average returns to education in Nepal at around 6%, using labour-force data and education costs. Its cost-benefit calculations found that private education often produced a negative net present value at a 6% discount rate, while public education generated positive returns. The result depends on assumptions about costs, future earnings and the value of money over time. It is a brutal warning about expensive education, and not proof that every private degree is a bad investment.
That disparity matters. A degree can raise earnings and still offer a piss-poor return if it costs too much or takes too long, or say, leads to a job that barely uses the skills acquired. A student who pays substantial fees for a course and then earns a dismal salary may be better off than someone without a degree, but worse off than a student who chose a cheaper course or entered paid work earlier.
The calculation starts with the full, ugly cost. Tuition is only the most noticable part. A family may also pay for accommodation, transport, books, examination fees, equipment and years of living expenses while the student studies. Those costs are especially brutal when the student could otherwise have been earning. Money spent on a degree also cannot be invested in a shop or another source of household income.
Private colleges have every incentive to sell the destination rather than the journey. A course advertised as a route into banking or information technology can attract fees even when the college has crap links with employers. Students may graduate with a certificate and discover that firms expect practical experience, software proficiency, communication skills or professional credentials that the course barely taught.
Nepal’s own higher-education regulator has acknowledged the mess. The University Grants Commission’s strategic plan for 2024-29 cites low graduation rates, inadequate workplace skills and graduate unemployment as major concerns. It also calls for closer collaboration between universities and industry, and for courses to be better matched to labour-market needs.
The economy compounds the problem. The International Monetary Fund’s 2026 assessment of Nepal describes an economy where formal-sector job creation has lagged behind the growth of the labour force. Educated young people are often concentrated in low-productivity informal work. A graduate can therefore find employment and still struggle to recover the cost of the education that was supposed to improve his or her prospects.
This is why unemployment alone is a crap test of a degree’s value. A graduate who works in a job requiring little formal education counts as employed, even if the position pays less than the qualification would suggest. The more revealing questions are what graduates earn, how long it takes them to find work, how closely their jobs match their training and how much they paid to qualify.
The choice of subject matters, though the evidence needs careful handling. A medical or engineering qualification can open a route into a regulated profession. Accounting and computing courses can lead to specialised work when students acquire practical competence alongside the credential. Other degrees may offer less direct routes into employment, particularly when employers have little reason to distinguish one graduate from another. Yet outcomes vary within every field, and a subject’s reputation alone cannot establish its financial return.
Nor does the university’s name settle the question. A costly institution may provide stronger teaching, better facilities and access to employers. It may also charge a premium that a graduate’s eventual salary takes years to repay. A cheaper public institution can offer better value, provided the student receives a sound education and develops skills employers need. The relevant comparison is the additional earnings attributable to the course against its full cost, rather than the prestige of the certificate.
For families, the decision is complicated by social pressure. A degree carries status and can reassure parents that they have given their children the best available start. Vocational training may look like a lesser ambition, even when a skilled technician or hospitality worker can earn sooner and build experience without spending years in a lecture hall. The prestige attached to university education can obscure the financial trade-off.
Migration makes the decision tougher still. Studying abroad may offer access to better-paid work and qualifications recognised by international employers. It can also require large upfront payments and expose families to debt before a student has secured a job. Nepal’s University Grants Commission has warned about the large outflow of students to foreign universities and the low probability of many returning. The private decision can make sense for a family even when the country loses a future skilled worker.
The solution is hardly to persuade young Nepalis to abandon university. Education produces benefits that wages alone cannot capture, including better health, civic participation and the ability to adapt to technological change. A country that underinvests in education limits its own development. The aim should be to make education more productive, with reliable information about course costs and graduate outcomes.
Universities also need stronger links with employers and more opportunities for students to gain practical experience before finishing their courses. Short vocational programmes and apprenticeships deserve equal scrutiny and respect. Their value should be judged by the skills they teach, the jobs they open and the earnings they help people achieve.
The final responsibility lies with the economy. Even an excellent university cannot manufacture enough well-paid jobs on its own. Nepal needs firms that invest, expand and use skilled labour productively. Without that demand, improving education risks producing more qualified people competing for the same narrow set of desirable positions.
A degree should widen a young person’s options and raise the value of their work. For many Nepalis, it still does. The question is how much families must pay for that advantage, and how reliably it arrives. The education boom will have delivered its full economic promise only when the price of a qualification bears a sensible relationship to the opportunities it creates. ■
