PM Vidyalaxmi Scheme: Affordable Education Loans for Aspiring Students

Source: pmindia

The Indian Government, led by Prime Minister Narendra Modi, has launched the PM Vidyalaxmi scheme, an initiative under the National Education Policy 2020 to financially support meritorious students for higher education. This program offers financial aid to students to remove economic barriers and expand access to quality higher education.

Objective of PM Vidyalaxmi Scheme

PM Vidya Lakshmi Scheme primary goal is to empower capable students from all backgrounds by ensuring they have the means to pursue their higher education dreams, regardless of financial constraints. The scheme emphasizes accessibility, simplicity, and a fully digital application process for greater transparency.

Eligibility Criteria for PM Vidya Lakshmi Scheme

The Vidya Lakshmi Scheme is available to students who have been admitted to institutions ranked among the top 100 in the National Institutional Ranking Framework (NIRF). The scheme also includes public and private institutions, with an annual update of the list of eligible institutions based on NIRF rankings.

Eligibility for Subsidy: The scheme is open to students from families earning up to ₹8 lakhs annually, offering substantial interest subventions for loans.

Institutions Covered: Includes 860 NIRF-ranked institutions initially, with updates to the list every year.

PM Vidyalaxmi Scheme Loan and Financial Coverage 

Under the PM Vidya Lakshmi Scheme, students are eligible for collateral-free loans for tuition and course-related expenses. The scheme provides:

• Loan Amount: Students can borrow up to the full cost of tuition and other course-related expenses.
• Credit Guarantee: For loans up to ₹7.5 lakhs, there is a 75% credit guarantee on outstanding defaults, making it easier for banks to approve loans.

Interest Subvention for Lower-Income Families

• Income-Based Support: For students whose family income is up to ₹8 lakhs annually, the scheme offers a 3% interest subvention on loans up to ₹10 lakh.
• Moratorium Period Benefit: This interest subvention applies only during the moratorium period.
• Beneficiaries: The subvention will assist one lakh students annually, prioritizing government institution students and those in technical or professional courses.

Unified Digital Platform for PM Vidya Lakshmi Scheme Application

• Application Portal: The Department of Higher Education will operate PM Vidya Lakshmi Scheme through a unified, interoperable digital portal where students can apply for both education loans and interest subventions.

• Payment Mode: Interest payments will be made through e-vouchers and Central Bank Digital Currency (CBDC) wallets, streamlining the process.

Complementary Schemes for Enhanced Access

In addition to the PM Vidya Lakshmi Scheme Scheme, students can benefit from other government initiatives such as:

• CSIS and CGFSEL: PM Vidya Lakshmi Scheme complements existing schemes like the PM-USP Central Sector Interest Subsidy (CSIS) and the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), both offering support for students from lower-income families pursuing professional courses.
• Scope of Support: These combined efforts create a holistic support system for students across income groups, including full interest subventions for loans up to ₹10 lakh for eligible students from families earning up to ₹4.5 lakhs annually.

Financial Outlay and Expected Impact

The government has allocated ₹3,600 crore for the PM Vidyalaxmi Scheme from 2024 to 2031, with an expected impact on around 7 lakh new students by 2031. This will ensure that over 22 lakh students annually have access to loans and interest subsidies.