New PM-Vidyalaxmi Scheme to Provide Collateral-Free Loans for Meritorious Students

Government Approves PM-Vidyalaxmi Scheme to Make Quality Education Accessible for All

The PM Vidyalaxmi scheme is an initiative by the Union Cabinet, led by Prime Minister Narendra Modi. The scheme aims to provide financial assistance to meritorious students, enabling them to pursue higher education without financial constraints. In alignment with the recommendations of NEP 2020, this scheme offers financial support to talented students through various measures in both public and private higher educational institutions.

Under this scheme, students can obtain loans from banks and financial institutions without the need for collateral or a guarantor. These loans will cover the full cost of tuition fees and other course-related expenses. The process is designed to be simple, transparent, and user-friendly, all through a fully digital platform. For loans up to ₹7.5 lakhs, students will also receive a 75% credit guarantee in case of default. This means that if the student is unable to repay the loan, the government will cover 75% of the remaining amount. This provision helps banks feel more confident in offering loans, making it easier for students to access funding for their higher education.

Initially, around 860 institutions will be eligible for the scheme, benefiting about 22 lakh students. These institutions are among the top-ranked in India, as determined by the National Institutional Ranking Framework (NIRF). The list includes both government and private institutions that rank within the top 100 in overall, category-specific, and domain-specific rankings. It also covers state government institutions ranked between 101 and 200 in the NIRF, along with all central government-run institutions. The list of eligible institutions will be updated annually based on the latest NIRF rankings.

For students with a family income of up to ₹8 lakhs, who are not eligible for other government scholarships or interest subvention schemes, the government will provide a 3% interest subvention on loans up to ₹10 lakhs during the moratorium period. This support will be available to about one lakh students each year, with priority given to those in government institutions or pursuing technical and professional courses. The government has allocated ₹3,600 crore for this initiative from 2024-25 to 2030-31, expecting to assist around 7 lakh students during this period.

The Department of Higher Education will launch a unified digital portal called "PM-Vidyalaxmi," where students can apply for both education loans and interest subvention through a streamlined process accessible to all banks. The payment of interest subvention will be made using E-vouchers and Central Bank Digital Currency (CBDC) wallets. The PM Vidyalaxmi scheme aims to enhance the government’s efforts in promoting education and financial inclusion, making quality higher education more accessible to Indian youth. It complements existing programs like the Central Sector Interest Subsidy (CSIS) and the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), both part of the PM-Universal Scholarship Program (PM-USP).

Under CSIS, students with a family income of up to ₹4.5 lakhs who pursue technical or professional courses from approved institutions receive full interest subvention on loans up to ₹10 lakhs during the moratorium period. Together, PM Vidyalaxmi and PM-USP will provide broad financial support to deserving students, enabling them to pursue higher education and professional training at top institutions.

In conclusion, these schemes collectively aim to reduce financial barriers, ensuring more students have the opportunity to access quality education and build better futures.

Editor's Note:

The PM Vidyalaxmi scheme is a groundbreaking initiative aimed at making higher education accessible to all deserving students, regardless of financial constraints. This initiative brings collateral-free, guarantor-free loans for the students, which will cover their tuition fees and other course-related expenses, for amounts up to ₹7.5 lakhs, a 75% credit guarantee is provided in case of default.
Additionally, students with a family income of up to ₹8 lakhs can benefit from a 3% interest subvention on loans up to ₹10 lakhs during the moratorium period. Priority will be given to those studying in government institutions or pursuing technical and professional courses. The scheme’s streamlined, digital application process makes it easier for students to apply for loans and interest subventions.

Skoobuzz commends the Union Cabinet for  PM Vidyalaxmi as it offers a comprehensive financial support system, helping students from various backgrounds access quality education and build better futures.