The PM-Vidyalaxmi scheme has been approved by the Union Cabinet to provide financial assistance to talented students pursuing higher education in public and private institutions. The initiative, announced on Wednesday, aims to offer education loans without the need for collateral or guarantors to students admitted to the top 860 Quality Higher Education Institutions (QHEIs) in India. This includes a variety of government and private institutions, ensuring accessibility to a diverse group of students.
With an estimated Rs 3,600 crore allocation for the period from 2024-2025 to 2030-31, the scheme is designed to support 2.2 million students annually by offering loans of up to Rs. 7.5 lakh at concessional interest rates.
“The PM-Vidyalaxmi Scheme is set to play a transformative role in shaping the future of India’s education system, fostering social equity, and driving national development. This initiative is a major step in making higher education more inclusive and accessible for all students, particularly those from economically disadvantaged backgrounds. We applaud Prime Minister Modiji’s vision to create create a skilled, educated workforce that will drive growth and create a better future for the youth of this country.,” said Prof. Manoj Tiwari, Director, IIM Mumbai.
Key details
> The scheme will be applicable to the top Qualifying Higher Education Institutions (QHEIs) identified through the National Institutional Ranking Framework (NIRF) rankings.
> This includes all Higher Education Institutions (HEIs), both government and private, that are ranked within the top 100 in NIRF in overall, category-specific, and domain-specific rankings.
> Additionally, state government HEIs ranked in 101-200 in the NIRF and all central government-run institutions will also be eligible for the scheme.
> The list of institutions eligible for the scheme will be updated annually based on the latest NIRF rankings. Initially, 860 qualifying QHEIs will be covered under the scheme.
> The programme is projected to assist more than 2.2 million students, giving them the opportunity to access the benefits of PM-Vidyalaxmi.
> Students can potentially qualify for a credit guarantee of 75% of any outstanding default for loan amounts up to Rs 7.5 lakhs.
Loan concession
Under the scheme, students seeking loans of up to Rs 7.5 lakh will benefit from a 75% credit guarantee, facilitating approval and disbursement by banks and financial institutions. This measure aims to mitigate financial risks for lenders and encourage increased support for students.
The scheme offers interest subvention for students with an annual family income of up to Rs 8 lakh, who do not receive any other government scholarships or interest-subvention benefits.
Eligible students will receive a 3% interest subsidy on loans up to Rs 10 lakh during the moratorium period, which is the time between loan disbursal and the start of repayment.
How to apply
The Higher Education Department will launch a single portal called “PM-Vidyalaxmi” where students can easily apply for education loans and interest subvention from all banks.
All banks will use this simplified application to facilitate easier access for students.
The payment of interest subvention will be distributed through E-vouchers and Central Bank Digital Currency (CBDC) wallets.
PM-USP CSIS
PM Vidyalaxmi aims to build upon and expand the existing initiatives of the Government of India in the fields of education and financial inclusion, with a focus on increasing accessibility to high-quality higher education for the youth of the country.
This effort will complement the ongoing Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL) under the Prime Minister’s Universal Support Program (PM-USP), which are being carried out by the Department of Higher Education.
Through PM-USP CSIS, students from families with annual incomes up to Rs 4.5 lakhs pursuing technical or professional courses at accredited institutions are eligible for full interest subsidy on education loans up to Rs 10 lakhs during the moratorium period. By working collaboratively, PM Vidyalaxmi and PM-USP will provide comprehensive support to deserving students seeking higher education at reputable institutions and technical/professional education at approved higher education institutions.