Higher Education Financing in Nepal: A Mathematical Analysis of Government Expenditure, Enrollment, and Educational Outcomes

Abstract

Nepal’s higher education system has expanded substantially over the past decade, yet whether increased public financing has generated commensurate improvements in access and educational outcomes remains unclear. This study assesses the relationship among government expenditure, student enrollment, and institutional outcomes in Nepalese higher education. It applies growth-rate, expenditure-elasticity, dispersion, and ratio-based analyses to publicly available data from government sources, the University Grants Commission, the World Bank, and UNESCO. Enrollment increased by approximately 71%, from about 371,000 students in fiscal year (FY) 2016/17 to 633,053 in FY 2023/24, while nominal public financing for higher education institutions rose from NPR 9.3 billion in FY 2017/18 to NPR 17.5 billion in FY 2023/24. The estimated expenditure elasticity of enrollment ranges from 0.71 to 0.80, indicating that financing grew faster than enrollment and suggesting rising unit costs rather than proportional access expansion. Despite higher nominal expenditure, education spending declined from 4.77% to 3.69% of gross domestic product following its 2017 peak, a reduction of approximately 23%, and from 25.5% to 14.1% of total government expenditure since 2006, a decline of nearly 45%. Pass rates across constituent universities display substantial dispersion, with a coefficient of variation of approximately 31%; Tribhuvan University, the largest and most heavily subsidized institution, records the lowest completion outcomes, a pattern consistent with congestion associated with adverse student–faculty ratios. Moreover, annual household expenditure on overseas education, estimated at NPR 67 billion, is approximately 3.8 times the state’s expenditure on the entire domestic higher education system, indicating substantial private substitution toward foreign education. These findings reveal a divergence among nominal financing growth, budgetary prioritization, institutional performance, and public confidence in domestic higher education. The study contributes a quantitative framework for evaluating financing efficiency and identifies policy priorities concerning resource allocation, institutional capacity, and educational quality, while proposing a formal regression specification for future panel-data analysis when more granular annual data become available.