New PM Vidyalaxmi Scheme: Student Loans Without Collateral or Guarantor Requirements

The Union Cabinet, led by Honourable Prime Minister Shri Narendra Modi, has approved PM Vidyalaxmi, a new Central Sector plan to provide financial assistance to economically weaker students so that financial restrictions do not impede them from pursuing higher education. PM Vidyalaxmi is another significant program resulting from the National Education Policy 2020, which advocates that meritorious students receive financial help through various methods in both public and private higher education institutions. Under the PM Vidyalaxmi initiative, any student admitted to a quality higher education institution (QHEI) will be eligible for a collateral-free, guarantor-free loan from banks and financial institutions to cover the total amount of tuition fees and other course-related expenses. The scheme will be administered using a simple, transparent, student-friendly, interoperable and digital system.

The scheme will be available to the nation's top quality higher educational institutions, as determined by the NIRF rankings, which include all higher education institutes (HEIs), government and private, that are ranked within the top 100 in NIRF in overall, category-specific and domain-specific rankings; state government HEIs ranked 101-200 in NIRF; and all central government-governed institutions. This list will be updated annually based on the most recent NIRF rankings. It will begin with 860 qualifying QHEIs, representing more than 22 lakh students who may be eligible for PM-Vidyalaxmi privileges if they so wish.

For loans up to Rs 7.50 lakhs, students can receive a credit guarantee of 75% of the outstanding default. This would help banks make education loans available to students under the initiative.

During the halt period, students with an annual family income of up to Rs 8.00 lakhs who are not qualified for other government scholarships or interest subvention schemes would receive a 3% interest subvention on loans up to Rs 10.00 lakhs. Every year, one lakh students will receive interest subvention support. Preference will be given to students from government institutions who have chosen technical/professional courses. From 2024-25 to 2030-31, an investment of Rs  3,600 Crore has been announced, with 7 lakh fresh students likely to benefit from this interest subvention.

The Department of Higher Education will establish a uniform platform called "PM-Vidyalaxmi", where students can apply for education loans and interest subsidies using a simplified application process that all banks will use. The interest subvention will be paid using E-vouchers and Central Bank Digital Currency (CBDC) wallets.

PM Vidyalaxmi will expand and broaden the scope and reach of the government's education and financial inclusion initiatives over the previous decade to maximise access to quality higher education for India's youth. This would enhance the Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL), the two PM-USP component schemes now being implemented by the Department of Higher Education. Students with an annual family income of up to Rs 4.50 lakhs and pursuing technical/professional courses from authorised institutions are eligible for total interest subvention on education loans up to Rs 10.00 lakhs during the PM-USP CSIS moratorium. Thus, PM Vidyalaxmi and PM-USP will work together to support all deserving students seeking higher education in quality HEIs and technical/professional education in authorised HEIs. 

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