New Delhi, 6 November 2024: The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the PM-Vidyalaxmi scheme, a new initiative aimed at providing financial assistance to meritorious students, ensuring that financial constraints do not hinder access to quality higher education. This scheme, in line with the goals of the National Education Policy (NEP) 2020, seeks to make education loans easily accessible to students who gain admission to top-ranked educational institutions.
The PM-Vidyalaxmi scheme will facilitate the disbursement of collateral-free, guarantor-free loans to meritorious students pursuing higher education at the top 860 quality higher educational institutions (QHEIs) across India. These institutions will include those ranked in the top 100 in the National Institutional Ranking Framework (NIRF), as well as select state government and central government institutions. The initiative is expected to cover more than 22 lakh students annually, enabling them to pursue higher education without the burden of financial constraints.
Key features of the scheme include:
1. Collateral-Free Loans: Students admitted to the QHEIs will be eligible for education loans to cover full tuition fees and other course-related expenses, with no need for collateral or a guarantor.
2. Interest Subvention:
For students with a family income of up to ₹8 lakhs per year, an interest subvention of 3% will be provided on loans of up to ₹10 lakhs, during the moratorium period. This benefit is available for one lakh students annually.
For students with family incomes up to ₹4.5 lakhs per year, the scheme will provide full interest subvention during the moratorium period for loans up to ₹10 lakhs.
3. Credit Guarantee: A 75% credit guarantee will be provided by the Government of India for loans up to ₹7.5 lakhs, which will help mitigate risks for banks and financial institutions offering loans under the scheme.
4. Digital Application Process: The entire process will be digital, transparent, and student-friendly, with a unified portal for application and loan processing. The scheme will also use E-vouchers and Central Bank Digital Currency (CBDC) wallets for the payment of interest subvention.
5. Targeted Support for Technical and Professional Courses: Preference will be given to students from government institutions pursuing technical or professional courses, as these fields are seen as key to fostering skilled human capital.
The scheme aims to extend the benefits of the Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL), both of which already assist students pursuing education at approved institutions. The PM-Vidyalaxmi scheme will enhance the scope of these initiatives and further strengthen the Government’s efforts to maximize access to quality education for the youth of India.
An outlay of ₹3,600 Crore has been allocated for the period from 2024-25 to 2030-31, with the expectation that 7 lakh new students will benefit from the interest subvention over the period.
This initiative is expected to support India's long-term vision of making higher education more accessible, inclusive, and equitable for all students, irrespective of their economic background.
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