Cabinet Approves PM-Vidyalaxmi Scheme for Collateral-Free Education Loans

GG News Bureau
New Delhi, 7th Nov. The Union Cabinet, led by Prime Minister Narendra Modi, has approved the PM Vidyalaxmi scheme, a new initiative aimed at expanding access to quality higher education by providing financial support to meritorious students. The scheme, inspired by the National Education Policy (NEP) 2020, aims to ensure that financial challenges do not hinder any young Indian’s pursuit of higher studies in top educational institutions.

The PM Vidyalaxmi scheme will operate through a mission mode mechanism to make education loans accessible to students who gain admission into 860 top-ranked higher educational institutions (HEIs) in the country, as per NIRF rankings. The scheme is set to benefit more than 22 lakh students annually, providing them with a streamlined, digital process to secure collateral-free, guarantor-free loans covering tuition and related educational expenses.

Key Features of PM Vidyalaxmi

1. Student-Friendly Loan Process: The scheme offers a fully digital, transparent application process designed to be accessible to students across India. It provides a special loan product enabling loans up to ₹10 lakh, with up to ₹7.5 lakh eligible for a 75% credit guarantee by the government, encouraging banks to extend loan coverage without extensive collateral requirements.
2. Interest Subvention for Financially Disadvantaged Students: For students with an annual family income of up to ₹8 lakh, PM Vidyalaxmi will provide a 3% interest subvention on loans up to ₹10 lakh during the moratorium period. Additionally, students from families earning less than ₹4.5 lakh annually will receive full interest subvention, extending the benefits of this scheme to an estimated seven lakh students by 2030.
3. Coverage of Top Institutions: The scheme is available to students accepted into the top 100 institutions in NIRF’s overall and category rankings, as well as government institutions ranked within 101-200. The list of eligible HEIs will be updated yearly to ensure that high-quality institutions are accessible to students needing financial assistance.
4. Enhanced Accessibility through a Unified Portal: The scheme will be administered through a dedicated portal, “PM-Vidyalaxmi,” where students can apply for loans and access interest subvention benefits. Payments will be made through e-vouchers and CBDC wallets, enhancing efficiency and ease of use.

Expanding Education Opportunities

The PM Vidyalaxmi initiative builds on previous efforts by the government to support students financially through programs such as the Central Sector Interest Subsidy (CSIS) and the Credit Guarantee Fund Scheme for Education Loans (CGFSEL). Together, these initiatives aim to remove financial barriers to quality education, particularly for students from low-income families, and ensure the availability of funds for technical and professional education.

The government has allocated ₹3,600 crore for the implementation of this scheme from 2024-25 to 2030-31, underscoring its commitment to educational equity. This move is expected to intensify India’s strides toward making higher education accessible to all and equipping its youth for a competitive global landscape.

As PM Vidyalaxmi rolls out, it is set to become a cornerstone of India’s educational and financial inclusion policies, supporting students’ aspirations and fostering a generation of skilled professionals prepared to drive the nation’s progress.