Nepal Orders Shutdown of Private Schools and Conversion to State-Run Institutions

In April 2026, Nepal's Ministry of Education, Science and Technology issued a series of directives that sent shockwaves through the country's private education sector: a ban on bridge courses and entrance preparation classes, mandatory enforcement of fee caps, compulsory 10 percent scholarships at private schools, and a prohibition on early admissions [1][2]. These executive actions arrived on the heels of a bitterly contested School Education Bill that proposes converting all private schools into non-profit trusts — a move that would fundamentally restructure how 3.3 million children are educated [3][4].

The policy has been framed by its supporters as a constitutional obligation to ensure equitable access to education, and by its opponents as an unconstitutional seizure of private property. Both sides claim the evidence supports them. The truth is more complicated.

The Scale of What's at Stake

Nepal's education system is split between two parallel worlds. In the 2024/25 academic year, the country had 35,447 schools: 27,298 community (public) schools and 8,149 institutional (private) schools [5]. Private schools account for 23 percent of all schools but enroll 3.3 million of the country's 7.8 million students — roughly 42 percent of the total student population [5][6].

Source: Nepal Ministry of Education

Data as of Jan 1, 2025CSV

Source: Nepal Ministry of Education

Data as of Jan 1, 2025CSV

The growth of private enrollment at the primary level has been steep. World Bank data shows the share of primary students in private schools rising from about 13 percent in 2010 to over 25 percent by 2020 [7].

Source: World Bank Open Data

Data as of Dec 31, 2020CSV

This trajectory tells a story: Nepali families with means have been voting with their feet, moving children out of government schools and into private ones in increasing numbers.

The Quality Gap: Real or Illusory?

The most striking data point in the debate is the pass rate gap on Nepal's School Leaving Certificate (SLC) examination. In 2015, approximately 90 percent of private school students passed the SLC, compared to just 34 percent of public school students [8]. In more recent SEE (Secondary Education Examination) results, the disparity in English language scores is so wide that the lowest-scoring private school student outperformed the highest-scoring public school student in some districts [9].

Source: Nepal Ministry of Education

Data as of Jan 1, 2023CSV

Research using propensity score matching — a statistical technique that controls for differences in family background — found that the positive private school effect remains significant even after accounting for self-selection bias [8]. In other words, the quality gap is not entirely explained by the fact that wealthier families send their children to private schools.

However, the picture is not one-dimensional. Private schools showed higher quality of instruction and more unified governance, but researchers in the Western Chitwan Valley found that external results reinforced socioeconomic stratification [10]. The main consequence of loosely controlled private school expansion, according to a UNESCO-affiliated study, has been "sustained stratification," with many public schools becoming "concentrations of disadvantage" [11]. When school choice is determined by ability to pay, the market stratifies households by income — and the gap between public and private outcomes is larger in areas with higher private sector growth [11].

This is the central tension: the private sector delivers better measurable outcomes, but its growth may be undermining the system it coexists with.

What the Government Is Actually Doing

The policy is not a single action but a convergence of executive directives and legislative proposals.

The School Education Bill, which passed through a parliamentary committee in August 2025 despite fierce opposition, originally proposed converting private schools into non-profit trust (Guthi) structures [4]. The High-Level National Education Commission, which submitted its report to then-Prime Minister KP Sharma Oli in January 2019, recommended a 10-year timeline for this conversion [12]. Oli never made the report public; it was only released under the subsequent Pushpa Kamal Dahal government under pressure from Education Minister Sumana Shrestha [12].

Different political parties proposed different timelines: the Nepal Majdoor Kishan Party wanted five years, CPN-UML and Nepali Congress proposed 10, and the Rastriya Swatantra Party pushed for 20 years [4][13].

However, under intense lobbying from private school operators, the parliamentary committee ultimately retreated from the most aggressive version. The bill as amended allows existing schools to remain as companies and permits new schools to register under the Company Act [4]. Prime Minister Oli himself assured private school operators in March 2025 that there would be "no forced conversion into trusts" [14].

The regulatory crackdown under Education Minister Sashmit Pokharel in early 2026 represents a parallel track: banning bridge courses, enforcing fee regulations, mandating scholarships, and shutting down illegally operating schools [1][2][15]. Eleven schools operating without registration in Dhanusha district were closed [15]. The Supreme Court barred private schools from taking admissions before the new academic session [16].

The distinction matters. The headline "Nepal shuts down private schools" overstates the current policy. What is happening is a combination of regulatory enforcement, proposed structural conversion (with an uncertain legislative path), and political rhetoric that varies depending on the audience.

The Legal and Constitutional Battleground

Nepal's 2015 Constitution creates tension between competing rights. Article 31 establishes the right to "free and compulsory" basic education and free education through secondary level, making the state responsible for ensuring access [17]. The Right to Free and Compulsory Education Act, enacted three years later, guarantees free basic education for every child aged 4–13 [17].

At the same time, the constitution protects private property and stipulates that the state shall not "requisition, acquire or create any encumbrance on, the property of any person" except in the public interest [17]. Private school operators argue that forcing them to convert to non-profit trusts — and surrender the ability to earn returns — amounts to an uncompensated taking of property [13].

The High-Level Education Commission justified its trust conversion recommendation by citing Article 31(2), arguing that allowing private educators to "generate profit" constitutes a breach of constitutional provisions making the state responsible for education [12]. This legal theory has not been tested in Nepal's Supreme Court.

Private school umbrella organizations including PABSON (Private and Boarding Schools' Association Nepal) and N-PABSON (National Private and Boarding Schools' Organization Nepal) announced indefinite school closures starting August 13, 2025, directly challenging the bill's provisions [18]. PABSON organized vehicle rallies and nationwide demonstrations, with demands centered on removing the non-profit conversion clause and the mandatory full-scholarship provisions requiring 10–15 percent of seats to be free [18][19].

The Teacher Question

The staffing implications are substantial. Privately hired teachers account for approximately 42 percent of Nepal's teaching workforce [20]. About 14 percent of teachers across the system work as temporary teachers in positions classified as permanent [20]. The education bill proposes enabling 46,000 eligible temporary teachers to compete for permanent positions through structured examinations [21].

Teacher unions have their own demands: making 75 percent of temporary teachers permanent through internal competition, pay parity and social security for private school teachers, and full trade union rights [22]. The bill offers a compromise — 60 percent of positions filled through internal competition, 40 percent through open tests — that satisfies neither side fully [22].

For private school teachers specifically, the transition to a public system raises questions about credential recognition and civil service eligibility. Student unions have pushed for merit-only teacher recruitment [23], which could disadvantage experienced private school teachers who entered the profession through different channels. The bill includes provisions to affiliate private-source teachers with the Social Security Fund [20], but the details of how credentials would transfer remain contested.

The government has acknowledged fiscal constraints. Officials have stated publicly that the government "has no funds to meet all of teachers' demands" [24].

Can the Budget Absorb the Shock?

Nepal's government spending on education has hovered between 3.5 and 4.8 percent of GDP over the past 15 years, with a recent decline to approximately 3.7 percent in 2024 [7]. As a share of the consolidated budget, education spending has fallen from 17 percent in 2011/12 to about 11 percent in 2021/22 [25].

Source: World Bank Open Data

Data as of Dec 31, 2024CSV

Households and private entities currently cover 34.6 percent of total education expenditure [26]. If the 3.3 million students now in private schools were absorbed into the public system, the government would need to replace that private funding while maintaining per-pupil spending levels — at a time when the education budget share is already declining.

The Asian Development Bank has documented structural weaknesses in Nepal's school education financing, including inadequate per-pupil allocations and a "blanket approach" to funding that fails to account for variation in school needs [27]. Without a corresponding increase in the education budget, absorbing private school students would almost certainly dilute per-pupil spending in public schools — the system where student outcomes are already significantly worse.

Who Benefits?

The political economy of education reform in Nepal is tangled. The education sector is heavily influenced by powerful interest groups — teachers' associations, student unions, and private school operators — all of which maintain direct links to political parties [22][28].

Teachers' unions, which are aligned with major political parties, stand to gain from an expanded public system that increases the number of permanent government teaching positions. The demand to convert 46,000 temporary teachers to permanent status is, among other things, a patronage question: permanent government jobs in Nepal come with pensions, social security, and political significance [21].

Private school operators, meanwhile, have their own political connections. PABSON and N-PABSON have significant lobbying power and linkages with political parties [13]. The government's March 2025 assurance of "no forced conversion" came after direct lobbying from these umbrella organizations [14].

Student unions affiliated with the ruling and opposition parties have mobilized in favor of the bill, with 17 unions presenting demands that counter those of private school operators [28]. Their primary concern is affordability — the elimination of arbitrary fee hikes and the expansion of scholarship access.

No independent body has conducted a public audit of whether the bill's design reflects educational evidence or factional interest. The High-Level Education Commission's 2018 report — the closest thing to an evidence base — was itself politically controversial, withheld from public view by one prime minister and released by another under political pressure [12].

Lessons from Elsewhere

Nepal is not the first country to attempt large-scale restructuring of private education. The record from comparable efforts in other low- and middle-income countries is mixed at best.

Zimbabwe expanded government control over education following independence in 1980, rapidly increasing enrollment but facing chronic quality and funding challenges in subsequent decades [29]. The experience illustrates a common pattern: nationalization can expand access but often struggles to maintain quality without sustained fiscal commitment.

In multiple African and South Asian contexts, researchers have found that heavy-handed regulation of private schools tends to push operators underground rather than improving the public alternative [11]. The World Education Blog, drawing on Nepal-specific research, warned that the "consequences of private school growth" include stratification, but that the root cause is underinvestment in public schools — not the existence of private ones [11].

The available cross-country evidence suggests that the most successful education systems find ways to regulate private providers while simultaneously investing in public school quality, rather than treating the two as zero-sum.

What Happens Next

The School Education Bill's final form remains uncertain. The parliamentary committee version — which retreated from mandatory trust conversion — still faces opposition from multiple directions. Private school operators want the non-profit language removed entirely. Student unions want it strengthened. Teachers' unions want staffing provisions expanded. The government itself has sent mixed signals, with the prime minister reassuring private operators while the education minister enforces aggressive new regulations [1][14].

The most immediate effects are being felt by families. The ban on bridge courses and entrance preparation classes, effective April 14, 2026, disrupts a well-established pipeline that private school students used to prepare for competitive higher education admissions [1]. The mandatory 10 percent scholarship, now enforced nationwide, shifts costs within private schools but does not address the fundamental question of whether the public system can serve as a credible alternative [2].

Nepal's education debate is ultimately a proxy for a larger question: whether the state can deliver on its constitutional promise of quality education for all, or whether that promise remains aspirational while families who can afford alternatives continue to seek them. The answer depends less on what happens to private schools and more on what happens inside public ones.