With the aim of benefiting the middle class and the youth, the Union cabinet on Wednesday approved a new scheme—PM Vidyalaxmi—that seeks to provide financial support to meritorious students pursuing higher studies at top-ranking institutions across the country.
The scheme originates from one of the recommendations of the new National Education Policy. The PM Vidyalaxmi scheme will allow any student admitted to a quality Higher Education Institution (QHEI) to access collateral-free, guarantor-free loans from banks and financial institutions.
These loans will cover the full amount of tuition fees and other course-related expenses. The scheme is expected to benefit 22 lakh students. The scheme will applicable to 860 institutions which qualify the criteria.
“No meritorious student will be denied higher education due to financial constraints,” said Union Minister Ashwini Vaishnaw. An outlay of Rs 3,600 crore has been allocated for the period from 2024-25 to 2030-31, with an estimated 7 lakh new students expected to benefit from the interest subvention during this time.
Under the scheme, students taking loans up to Rs 7.5 lakh will be eligible for a 75 per cent credit guarantee for any outstanding defaults. Additionally, students with an annual family income of up to Rs 8 lakh, who are not already receiving benefits from other government scholarship or interest subvention schemes, will be eligible for a 3 per cent interest subvention on loans up to RS 10 lakh during the moratorium period.
The scheme will support one lakh students every year, with priority given to students from government institutions who are pursuing technical or professional courses.
With spiralling education costs, the scheme will help the meritorious and needy students to study in top notch colleges.
The minister emphasized that the scheme will be transparent, student-friendly, and fully digital, offering a simple and interoperable application process.
“The scheme will be applicable to top-quality higher educational institutions in the country, as ranked by the National Institutional Ranking Framework (NIRF), including both government and private institutions ranked within the top 100 in overall, category-specific, and domain-specific rankings. It will also include state government institutions ranked 101-200 in NIRF and all central government-governed institutions,” the cabinet statement said.
This list will be updated annually based on the latest NIRF rankings, with the initial list covering 860 eligible QHEIs. More than 22 lakh students will be eligible to potentially benefit from the PM Vidyalaxmi scheme.
The Department of Higher Education will soon launch a unified digital portal, "PM-Vidya Laxmi," where students can apply for education loans and interest subventions through a simplified process available to all participating banks.