The higher education system in Nepal has witnessed major achievements and challenges in the past few decades. This paper takes stock of the way the system has evolved and is now mismanaged, with a particular attention to the overall structure, financial management, quality control, and human resources that are central to fulfilling its societal promise. Given that these challenges have been a by-product of an evolving process of policy formation drawing from both global forces and local contexts, this analysis explains how the country has arrived at the current policy of "reluctant privatization" using path dependence and Advocacy Coalition Framework. Whereas the Government of Nepal is at a crossroads in reforming higher education, the insights from this analysis help students, researchers, and policymakers better understand the stakes involved and the potential fault lines that have occurred in its evolving historical context.