 "PM-Vidyalaxmi scheme approved to provide collateral-free student loans")
The Union cabinet, led by Prime Minister Narendra Modi, on Wednesday approved the PM-Vidyalaxmi scheme, which provides support for meritorious students in pursuing quality higher education. This scheme aims to ensure that financial constraints do not hinder deserving students from accessing higher education, especially in top-ranked institutions across India. Support can extend from facilitating loans, credit guarantee, interest subversion on loans, and more.
Rs 3,600 crore has been allocated for the financial year 2024-25 to 2030-31.
The PM-Vidyalaxmi scheme builds on the foundation set by the National Education Policy (NEP) 2020 and complements existing government initiatives such as the PM-USP Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL), the Centre said in its official release.
Together, these programmes aim to make quality higher education more accessible to economically disadvantaged students. Additionally, the initiative aligns with India’s broader mission of enhancing educational and financial inclusion, by benefiting 700,000 new students annually. Key features of the PM-Vidyalaxmi scheme include:
Financial support through loans
The scheme facilitates easy access to collateral-free, guarantor-free education loans for students gaining admission to the top 860 higher education institutions (HEIs), covering more than 2.2 million students annually. These institutions are selected based on National Institutional Ranking Framework (NIRF) ratings, and the list will be updated yearly.
Loan coverage and credit guarantee
For loans up to Rs 7.5 lakh, students are eligible for a 75 per cent credit guarantee from the Government of India. This will help banks expand education loan coverage for eligible students, ensuring broader access.
Interest subvention for economically disadvantaged students
Interest subvention 3 per cent: Students with a family income of up to Rs 8 lakh per year can avail 3 per cent interest subvention on loans up to Rs 10 lakh during the moratorium period. This support, benefiting 1 lakh students yearly, prioritises students in government institutions enrolled in technical or professional courses.
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Full interest subvention: Students with an annual family income of up to Rs 4.5 lakh will continue to receive full interest subvention on education loans under the PM-USP scheme.
Digital and transparent process
The scheme will be administered via a dedicated PM-Vidyalaxmi portal, providing a fully digital application system. This portal will unify access to loan applications and subvention benefits, with payments facilitated through e-vouchers and Central Bank Digital Currency wallets.