The Union Cabinet on Wednesday gave its nod to the PM-Vidyalaxmi scheme, a new initiative designed to support meritorious students with financial aid for higher education through collateral-free loans. The scheme, intended to remove financial obstacles for students seeking quality education, is set to benefit over 2.2 million students annually by offering loans for full tuition and additional educational expenses.
Announcing the scheme, Union Minister of Information and Broadcasting, Ashwini Vaishnaw, stated, “The Cabinet has approved the PM-Vidyalaxmi scheme to provide financial support to meritorious students so that financial constraints do not prevent any youth of India from pursuing quality higher education.” The scheme is a cornerstone in the government’s broader strategy to make higher education more accessible to students from diverse socioeconomic backgrounds.
Key features and eligibility
Under PM-Vidyalaxmi, any student admitted to a recognized higher educational institution in India will be eligible for a loan, with no requirement for collateral or a guarantor. This collateral-free arrangement aims to ensure that all meritorious students, regardless of their family’s financial background, can pursue higher studies without concerns about loan security.
A significant provision of the scheme is the central government’s 75% credit guarantee on loans up to Rs 7.5 lakh. This guarantee reduces the risk for banks and financial institutions, encouraging them to extend loans to students at affordable terms. An interest subvention component is also included in PM-Vidyalaxmi. Students with an annual family income of up to Rs 8 lakh can receive a 3% interest subsidy on loans up to Rs 10 lakh, which will help reduce the overall cost of borrowing.
Financial outlay and reach
The government has earmarked Rs 3,600 crore for the scheme, covering the period from 2024-25 to 2030-31. This substantial funding will assist students across both public and private institutions, contributing to the government’s vision of inclusive higher education. The scheme’s funding and framework underscore its ambitious target: to offer financial support to over 2.2 million students annually, with the potential to transform the academic journey for countless young individuals.
Digital implementation and accessibility
The PM-Vidyalaxmi scheme will operate through a unified government portal, simplifying the loan application process for students. Students who gain admission to eligible institutions can apply online for educational loans and interest subvention through this digital platform. To make transactions more efficient, the scheme will utilize e-vouchers and the Central Bank Digital Currency (CBDC) wallets for the disbursement of interest subventions, integrating digital technology into the financial aid process.
Institutional eligibility and criteria
In a notable move, the PM-Vidyalaxmi scheme sets specific criteria for eligible institutions. Initially, the scheme will cover 860 institutions, and this list will be updated annually based on the National Institutional Ranking Framework (NIRF). The framework includes top-ranked institutions across overall, category-specific, and domain-specific rankings, as well as state government-run institutes that fall within the 101-200 ranking range in the NIRF. Additionally, central government institutions are also covered, ensuring that students from a broad range of high-ranking institutes can benefit from the scheme.
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Supplementary support and broader goals
PM-Vidyalaxmi is designed to work in conjunction with existing schemes like the Central Sector Interest Subsidy (CSIS) and the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), both components of the PM-USP scheme. This integration will create a more comprehensive support system for students seeking education loans, providing them with more extensive financial support and credit assurances.
A blueprint for education aid
PM-Vidyalaxmi is structured with clear targets and strategic provisions, aiming to foster an environment where financial barriers do not impede educational aspirations:
- Funding: Rs 3,600 crore allocated until 2030-31 to aid students in higher education.
- Loan Guarantee: Up to Rs 7.5 lakh in loans with a 75% credit guarantee by the central government.
- Interest Subvention: 3% subsidy on loans up to Rs 10 lakh for families with incomes up to Rs 8 lakh.
- Eligibility Expansion: Coverage of 860 high-ranking institutions, updated annually by NIRF.
Empowering students for the future
The PM-Vidyalaxmi scheme marks a significant step in India’s commitment to supporting students in their pursuit of higher education. By offering comprehensive financial aid to students based on merit and institutional standing, the scheme aims to build a future where economic hardship does not hinder a student’s academic potential. With the Cabinet’s approval, PM-Vidyalaxmi is poised to bridge gaps in access to quality education, setting the stage for India’s next generation of scholars, innovators, and leaders.
