The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved PM Vidyalaxmi, a new Central Sector scheme that seeks to provide financial support to meritorious students so that financial constraints do not prevent anyone from pursuing higher studies. PM Vidyalaxmi is another key initiative stemming from the National Education Policy, 2020, which recommended that financial assistance should be made available to meritorious students through various measures in both public and private HEIs.
The government has allocated Rs 3,600 crore for the academic year 2024-25 to 2030-31, aiming to assist 7 lakh new students with the scheme. The new scheme aims to provide loans of up to Rs 10 lakh for higher education in domestic institutions. The PM-Vidyalaxmi include 3% interest rate subsidy and e-vouchers for one lakh students each year.
The eligible students can apply for loans through PM-Vidyalaxmi website, by filling application and following the process through E-voucher and Central Bank Digital Currency (CBDC) wallets.
What is PM-Vidyalaxmi?
Under the PM Vidyalaxmi scheme, any student who gets admission in quality higher education Institutions (QHEIs) will be eligible to get a collateral-free, guarantor-free loan from banks and financial institutions to cover the full amount of tuition fees and other expenses related to the course. The scheme will be administered through a simple, transparent, and student-friendly system that will be interoperable and entirely digital.
The scheme will be applicable to the top quality higher educational institutions of the nation, as determined by the NIRF rankings - including all HEIs, government and private, that are ranked within the top 100 in NIRF in overall, category-specific and domain-specific rankings; state government HEIs ranked in 101-200 in NIRF and all central government governed institutions. This list will be updated every year using the latest NIRF ranking, and to start with 860 qualifying QHEIs, covering more than 22 lakh students to be able to potentially avail benefits of PM-Vidyalaxmi if they so desire.
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For loans up to Rs 7.5 lakhs, the student will also be eligible for a credit guarantee of 75% of outstanding default. This will support banks in making education loans available to students under the scheme.
In addition to the above, for students having an annual family income of up to Rs 8 lakhs and not eligible for benefits under any other government scholarship or interest subvention schemes, 3 per cent interest subvention for loans up to Rs 10 lakhs will also be provided during the moratorium period. The interest subvention support will be given to one lakh students every year. Preference will be given to students who are from government institutions and have opted for technical/ professional courses. An outlay of Rs 3,600 Crore has been made during 2024-25 to 2030-31, and 7 lakh fresh students are expected to get the benefit of this interest subvention during the period.
Union Minister Ashwini Vaishnaw Describe PM-Vidyalaxmi Scheme
The Department of Higher Education will have a unified portal “PM-Vidyalaxmi” on which students will be able to apply for the education loan as well as interest subvention, through a simplified application process to be used by all banks. Payment of interest subvention will be made through E-voucher and Central Bank Digital Currency (CBDC) wallets.
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.
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Under the PM-USP CSIS, students with an annual family income up to Rs 4.5 lakhs pursuing technical/ professional courses from approved institutions get full interest subvention during the moratorium period for education loans up to Rs 10 lakhs. Thus, PM Vidyalaxmi and PM-USP will together provide holistic support to all deserving students pursuing higher education in quality HEIs and technical/ professional education in approved HEIs.