Union Cabinet Launches PM Vidyalaxmi Scheme to Provide Financial Assistance for Students Pursuing Higher Education

With a funding allocation of ₹3,600 crore for the 2024-25 to 2030-31 period, PM Vidyalaxmi is expected to benefit around seven lakh new students with interest subvention over the next seven years.

In a significant step towards ensuring inclusive access to higher education, the Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the PM Vidyalaxmi scheme. This central sector initiative aims to provide comprehensive financial support to deserving students, allowing them to pursue quality higher education without financial barriers. Rooted in the goals of the National Education Policy (NEP) 2020, PM Vidyalaxmi focuses on expanding access to loans and interest subsidies for meritorious students, irrespective of their socioeconomic backgrounds. Key Features of PM Vidyalaxmi:

Collateral-Free Loans for Quality Higher Education Institutions (QHEIs): Under PM Vidyalaxmi, students who secure admission to recognized QHEIs can receive collateral-free and guarantor-free education loans from participating banks and financial institutions. These loans will cover the full cost of tuition and other expenses, supporting students in meeting their academic goals without financial constraints.

Focus on Top Institutions: Eligibility extends to institutions ranked within the top 100 in the National Institutional Ranking Framework (NIRF) across various categories, as well as select state government HEIs ranked between 101-200 and all central government-run HEIs. This selection, starting with an initial 860 institutions, will be updated annually, ensuring alignment with the latest NIRF rankings and broadening the reach of PM Vidyalaxmi to potentially benefit over 22 lakh students.

Interest Subvention and Credit Guarantee:

For loan amounts up to ₹7.5 lakh, students will benefit from a 75% credit guarantee on any outstanding defaults, incentivizing banks to extend these education loans.

Additionally, students with family incomes up to ₹8 lakh, who do not qualify for other scholarship or interest subvention schemes, will receive a 3% interest subvention on loans up to ₹10 lakh. This subsidy applies during the loan's moratorium period and is designed to support up to one lakh students each year, particularly those enrolled in government institutions for technical and professional programs.

Unified Digital Platform for Easy Access: The PM Vidyalaxmi portal, managed by the Department of Higher Education, will streamline the loan and interest subsidy application process, making it entirely digital and interoperable across all participating banks. Payments for interest subvention will be processed through E-vouchers and Central Bank Digital Currency (CBDC) wallets, promoting both ease of use and transparency.

Financial Outlay and Expanded Support

With a funding allocation of ₹3,600 crore for the 2024-25 to 2030-31 period, PM Vidyalaxmi is expected to benefit around seven lakh new students with interest subvention over the next seven years. By enhancing the reach of educational finance, this scheme aims to eliminate cost as a barrier to higher education, empowering students across diverse disciplines and backgrounds.

Complementary Schemes for Holistic Support

PM Vidyalaxmi complements the existing PM-USP (Central Sector Interest Subsidy and Credit Guarantee Fund Scheme for Education Loans), which offers full interest subvention on loans up to ₹10 lakh during the moratorium period for students with family incomes below ₹4.5 lakh, specifically targeting those pursuing technical and professional courses. Together, PM Vidyalaxmi and PM-USP are expected to provide broad-based, holistic support, bridging gaps in financial aid for students at high-quality HEIs and fostering equitable access to higher education.

With this new initiative, the government aims to increase the representation of talented and deserving students in top-tier educational institutions, strengthening India’s knowledge economy and promoting the country’s goal of inclusive educational development.