PM-Vidyalaxmi scheme: Cabinet approves education loan for deserving students, aid up to Rs 10 lakh to be offered

The PM-Vidyalaxmi scheme has been approved by the Union Cabinet, under which financial assistance will be offered to deserving students, ensuring that financial constraints do not hinder any young individual from pursuing higher education of high quality.

The PM Vidyalaxmi scheme, a key initiative stemming from the National Education Policy 2020, aims to provide financial assistance to meritorious students in both public and private Higher Education Institutions (HEIs).

Under this scheme, students admitted to Quality Higher Education Institutions (QHEIs) can avail collateral-free and guarantor-free loans from banks and financial institutions to cover tuition fees and other course-related expenses. The scheme will be implemented through a user-friendly, transparent, and fully digital system that is interoperable.

As per the government notification, through a mission-oriented approach, education loans will be extended to qualified students entering the top 860 prestigious higher education institutions in the country, benefiting over 22 lakh students annually.

During the period from 2024-25 to 2030-31, an expenditure of Rs 3,600 Crore has been allocated, with an estimated 7 lakh new students anticipated to benefit from this interest subvention.

The Department of Higher Education is introducing a consolidated portal called "PM-Vidyalaxmi" where students can easily apply for education loans and interest subvention from all banks.

Key features

> Through this initiative, students accepted into Quality Higher Education Institutions (QHEIs) have the opportunity to access loans from banks and financial institutions without the need for collateral or a guarantor.

T> hese loans are intended to assist with covering tuition fees and other expenses related to their courses. The program will be executed through a user-friendly, transparent, and fully digital system that is interoperable.

> The program will be applicable to the highest quality higher education institutions in the country, as determined by the NIRF rankings. This includes all HEIs, both government and private, that are ranked within the top 100 in NIRF overall, category-specific, and domain-specific rankings; state government HEIs ranked between 101-200 in NIRF; and all centrally governed institutions.

> The list of qualifying QHEIs will be updated annually using the most recent NIRF ranking. The initial list consists of 860 qualifying institutions, encompassing over 22 lakh students who may potentially benefit from PM-Vidyalaxmi if they choose to do so.

> A unique loan product will be introduced to provide collateral-free and guarantor-free education loans, with a user-friendly digital application process that is simple and transparent. The Government of India will provide a 75% credit guarantee for loan amount up to Rs 7.5 lakh, assisting banks in expanding their coverage and support for students.

> The scheme will offer a 3% interest subvention on loans up to Rs. 10 lakh for students whose annual family income is up to Rs. 8 lakhs. This is in addition to the existing full interest subvention available to students with annual family income up to Rs. 4.5 lakhs. The PM Vidyalaxmi initiative aims to enhance the accessibility of quality higher education to youth by expanding on efforts made over the past decade.

> Preference will be given to students who are from government institutions and have opted for technical/ professional courses.

> The Department of Higher Education is introducing a consolidated portal called "PM-Vidyalaxmi" where students can easily apply for education loans and interest subvention from all banks.

> The interest subvention payments will be facilitated through E-vouchers and Central Bank Digital Currency (CBDC) wallets.

"A special loan product will enable collateral free, guarantor-free education loans; made accessible through a simple, transparent, student-friendly, and entirely digital application process. Loan amounts up to Rs 7.5 lakh will be provided a 75% credit guarantee by the Government of India, to support banks to expand coverage. Furthermore, for students with up to Rs 8 lakh annual family income, the scheme will also provide for 3% interest subvention on loans up to Rs 10 lakh. This is in addition to the full interest subvention already offered to students with up to Rs. 4.5 lakhs annual family income," the government said in a notification.

PM Vidyalaxmi-CSIS

PM Vidyalaxmi will build on and further enhance the scope and reach of the range of initiatives undertaken by the Government of India over the past decade in the domains of education and financial inclusion, for maximizing access to quality higher education for the youth of India. This will supplement the Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL), the two component schemes of PM-USP, being implemented by the Department of Higher Education. 

Through the PM-USP CSIS program, students from families with an annual income of up to ₹ 4.5 lakhs who are enrolled in technical/professional courses at approved institutions are eligible for full interest subvention on education loans up to ₹ 10 lakhs during the moratorium period. This initiative, in conjunction with PM Vidyalaxmi, aims to offer comprehensive support to deserving students seeking higher education at reputable institutions and technical/professional education at approved HEIs.

"PM Vidyalaxmi and PM-USP will together provide holistic support to all deserving students to pursue higher education in quality HEIs and technical/ professional education in approved HEIs," the government notification said.