Centre Govt. approves PM-Vidyalaxmi scheme for higher education

The Union Cabinet chaired by PM Narendra Modi on Wednesday i.e. November 6, 2024 approved a new Central Sector Scheme, PM Vidyalaxmi, which seeks to provide financial support to meritorious students in their pursuit of higher education. Under the scheme, a student who secures admission in any of the top 860 Quality Higher Education Institutions (QHEIs), both government and private, will be eligible to get collateral-free, guarantor-free loan from banks and financial institutions to cover full amount of tuition fees and other expenses related to the course. The scheme will potentially cover 22 lakh students.

PM Vidyalaxmi is another key initiative stemming out of the National Education Policy, 2020, which had recommended that financial assistance should be made available to meritorious students through various measures in both public and private HEIs.The scheme will be administered through a simple, transparent and student-friendly system that will be inter-operable and entirely digital.

For loan amount up to ₹ 7.5 lakhs, the student will also be eligible for a credit guarantee of 75% of outstanding default. This will give support to 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 ₹ 8 lakhs, and not eligible for benefits under any other government scholarship or interest subvention schemes, 3 percent interest subvention for loan up to ₹ 10 lakhs will also be provided during 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 ₹ 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.

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. Under the PM-USP CSIS, students with annual family income up to ₹ 4.5 lakhs and pursuing technical/ professional courses from approved institutions get full interest subvention during moratorium period for education loans up to ₹ 10 lakhs. Thus, 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.