New Delhi.: The Pradhan Mantri Vidyalaxmi (PM-Vidyalaxmi) scheme has been introduced by the Government of India to provide financial support to meritorious students pursuing higher education in quality Higher Education Institutions (QHEIs) in India. The Union Cabinet approved the Central Sector Scheme on November 6, 2024.
The scheme aims to ensure that financial constraints do not prevent eligible students from pursuing higher education. It provides access to collateral-free and guarantor-free education loans through a digital application process. Eligible students from families with an annual income of up to ₹8 lakh can also receive a 3% interest subvention on education loans up to ₹10 lakh, subject to the scheme's conditions.
What is the PM-Vidyalaxmi Scheme?
PM-Vidyalaxmi is a Central Sector Scheme of the Department of Higher Education designed to support students who secure admission to identified quality higher education institutions on merit.
The scheme covers students admitted to degree and diploma programmes offered by eligible QHEIs. The government has identified 860 quality higher education institutions for 2024-25, with the scheme expected to cover more than 22 lakh students every year.
Education loans under the scheme are available to students from all family income groups if they meet the institutional and admission requirements.
PM-Vidyalaxmi Scheme: Key Benefits
The scheme provides several forms of financial support to eligible students:
- Collateral-free and guarantor-free education loans
- 75% credit guarantee from the Government of India for eligible loans with a sanctioned amount of up to ₹7.5 lakh
- 3% interest subvention on education loans up to ₹10 lakh for students with annual family income of up to ₹8 lakh
- A digital and student-friendly loan application process
- Education loans for eligible degree and diploma programmes
- Repayment period of up to 15 years, excluding the moratorium period
Is the PM-Vidyalaxmi Education Loan Limited to ₹10 Lakh?
The PM-Vidyalaxmi guidelines clarify that there is no cut-off on the highest amount of education loan under the scheme. The actual loan amount depends on the course fee and other eligible expenses at the QHEI.
These expenses may include:
- Course and other institutional fees
- Hostel and mess expenses
- Refundable and non-refundable institutional fees
- Cost of a reasonable-quality laptop
- Reasonable living expenses during the course
However, the 3% interest subvention is applicable only to the disbursed principal amount up to ₹10 lakh.
Who is Eligible for PM-Vidyalaxmi Education Loan?
Students can avail themselves of the education loan if they:
- Secure admission on their own merit to an eligible Quality Higher Education Institution in India.
- Are admitted to an eligible degree or diploma programme.
- Obtain admission through an open competitive examination or merit-based admission process.
Students admitted through management quota or similar quota are not eligible for the scheme.
There is no family-income restriction for obtaining the education loan itself.
PM-Vidyalaxmi 3% Interest Subvention
Students whose annual family income is up to ₹8 lakh can be eligible for a 3% interest subvention on education loans up to ₹10 lakh.
The interest subvention applies to the interest accrued during the moratorium period, which is defined as the course period plus one year.
A maximum of one lakh interest-subvention beneficiaries can receive this benefit in a year. If the number of eligible applicants exceeds the available slots, selection will be carried out using the sequential method specified under the scheme.
Income-Based Interest Support
The PM-Vidyalaxmi scheme works alongside the PM-USP Central Sector Interest Subsidy (CSIS) scheme.
| Annual family income | Technical/Professional courses | Other degree/diploma courses |
|---|---|---|
| Up to ₹4.5 lakh | 100% interest subvention under PM-USP CSIS, subject to its conditions | 3% interest subvention under PM-Vidyalaxmi |
| ₹4.5 lakh to ₹8 lakh | 3% interest subvention under PM-Vidyalaxmi | 3% interest subvention under PM-Vidyalaxmi |
Under PM-USP CSIS, students with family income up to ₹4.5 lakh pursuing eligible technical/professional courses can receive full interest subvention during the moratorium period on education loans up to ₹10 lakh.
75% Credit Guarantee on Education Loans
The Government of India provides a 75% credit guarantee on outstanding default for education loans where the sanctioned loan amount is up to ₹7.5 lakh, subject to the applicable guidelines.
This credit guarantee is intended to support banks in expanding education-loan coverage.
The credit guarantee is available irrespective of the student's family income, provided the other scheme conditions are met.
Which Institutions Are Covered Under PM-Vidyalaxmi?
The scheme covers designated Quality Higher Education Institutions (QHEIs) in India.
The eligibility criteria for QHEIs include:
- Top 100 HEIs in the latest NIRF overall, category-specific and/or domain-specific rankings.
- Top 200 HEIs under State or Union Territory governments in the latest NIRF rankings.
- All remaining Higher Education Institutions under the Government of India.
Foreign education institutions, foreign campuses and Indian campuses of foreign education institutions are not covered under the scheme.
The Department of Higher Education will update the list of QHEIs every year using the latest NIRF rankings.
Which Courses Are Eligible?
The scheme covers all graduation and postgraduate degree and diploma courses offered by eligible QHEIs.
Students must be studying in India to receive the benefits under PM-Vidyalaxmi.
PM-Vidyalaxmi Loan Interest Rate
The interest rate charged on an education loan under PM-Vidyalaxmi is capped at the individual bank's Externally Benchmarked Lending Rate (EBLR) + 0.5%.
The guidelines also state that the interest rate charged under PM-Vidyalaxmi should be lower than the rate charged by the bank for education loans that are not covered under the scheme. Banks may offer an even lower rate according to their policies.
PM-Vidyalaxmi Loan Repayment and Moratorium
The repayment period for the education loan can extend up to 15 years, excluding the moratorium period.
The moratorium period is defined as:
Course period + one year
During the moratorium period, interest is calculated at a simple annual rate on the outstanding principal amount disbursed.
For eligible students receiving the 3% interest subvention, the government bears the applicable 3% interest for the moratorium period, subject to the scheme's conditions. The student remains responsible for the remaining interest and the repayment of the principal according to the loan agreement.
Who Will Not Get PM-Vidyalaxmi Benefits?
Students will not be eligible for PM-Vidyalaxmi benefits if they are already receiving another Central or State Government scholarship, interest-subvention scheme or fee reimbursement, subject to the scheme's provisions.
The interest-subvention and credit-guarantee benefits are also not available to students who discontinue their course midway or are expelled on disciplinary or academic grounds.
An exception is provided where discontinuation occurs due to medical reasons and the required documentation is submitted to the satisfaction of the head of the educational institution.
The interest-subvention and credit-guarantee benefits can be availed only once, for either an undergraduate, postgraduate or integrated course.
PM-Vidyalaxmi Portal and Application Process
The government has provided for a unified PM-Vidyalaxmi portal for education loan applications for students admitted to eligible QHEIs.
The portal is intended to facilitate:
- Education loan applications
- Loan processing and approval
- Loan disbursement updates
- Interest-subvention applications
- Consolidation and processing of interest-subvention claims
Students declare their annual family income while applying for an education loan. The guidelines state that the income certificate is not required to be uploaded at the initial loan application stage.
Students whose loans are sanctioned and disbursed during a financial year and whose declared annual family income is below ₹8 lakh may subsequently be informed to apply for interest-subvention benefits through the portal.
Documents Required for Interest Subvention
The guidelines list the following basic documents for interest-subvention applications:
- Student's Aadhaar, PAN and address proof
- Self-attested marksheets of the previous qualifying examination
- Entrance examination result
- Institution offer letter and fee structure
- Income proof issued by the designated public authority of the State Government
If an income certificate or other documents have already been verified by the QHEI during admission, the student may submit the prescribed certificate from the institution instead, wherever applicable.
How Are the 1 Lakh Interest-Subvention Beneficiaries Selected?
If eligible applications for the 3% interest subvention exceed one lakh in a year, the scheme provides a sequential selection mechanism.
The process gives preference based on factors including:
- State-wise allocation based on population
- Admission to a government HEI
- Technical or professional courses
- Passing Class 12 from a government school
- Passing Class 10 from a government school
- Passing Class 12 from a rural school
- Girl students
The scheme also provides safeguards to prevent a small number of institutions from dominating the application process.
PM-Vidyalaxmi Scheme: Important Points for Students
Students considering an education loan under PM-Vidyalaxmi should keep the following points in mind:
- The education loan itself has no maximum loan amount prescribed under the scheme.
- The 3% interest subvention applies to the loan principal up to ₹10 lakh.
- Education loans are available to students from all family-income groups, subject to eligibility.
- The student must secure admission through merit-based admission or an open competitive examination.
- Management-quota admissions are not eligible.
- The institution must be included among the designated QHEIs.
- The scheme applies to study in India.
- The 3% interest-subvention benefit is subject to the annual limit of one lakh beneficiaries.
- Students receiving another government scholarship, interest-subvention scheme or fee reimbursement are generally not eligible for overlapping benefits under PM-Vidyalaxmi.
PM-Vidyalaxmi Scheme: Supporting Access to Higher Education
The PM-Vidyalaxmi scheme is intended to expand access to education loans for students admitted to identified quality higher education institutions. Along with collateral-free and guarantor-free loans, the scheme provides targeted interest support for students from families with annual income up to ₹8 lakh.
The scheme works alongside existing government initiatives such as PM-USP CSIS and the PM-USP Credit Guarantee Fund Scheme for Education Loans (CGFSEL) to provide financial support to eligible students pursuing higher education in India.
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