The Union Cabinet, led by Prime Minister Narendra Modi, gave its approval to a new central sector scheme, viz., Pradhan Mantri Vidyalaxmi (PM-Vidyalaxmi) Scheme, on November 6, 2024. The scheme has been designed to offer financial assistance to the deserving students who aim to pursue higher education.
Some Key Features of the Scheme
- A mission-driven approach will promote and support the provision of education loans to the deserving students who gain admission to the top 860 Quality Higher Educational Institutions in the country, benefiting over 22 lakh students annually.
- The scheme will offer collateral-free and guarantor-free education loans, available through a simple, transparent, student-friendly, and fully digital application process.
- Loans up to Rs 7.5 lakhs will be covered by a 75 per cent credit guarantee from the Government of India, encouraging banks to increase their lending capacity.
- Students from families with an annual income of up to Rs 8 lakhs will receive a 3 per cent interest subsidy on loans up to Rs 10 lakh during mortarium period. This is in addition to the full interest subvention already provided to students with an annual family income of up to Rs 4.5 lakhs.
- The interest subvention support would be provided to one lakh students annually, with preference given to those from government institutions who would be pursuing technical or professional courses. In line with this, the Ministry of Education has allotted Rs 3,600 crore for the period from 2024–25 to 2030–32, with an expectation that seven lakh students would be benefited from the interest subvention during this time.
- The scheme applies to all scheduled banks, regional rural banks, and cooperative banks.
Application Process for the Scheme
The Department of Higher Education has introduced a unified portal vidyalakshmi.co.in for the scheme where students could apply for education loans and interest subsidies through a simplified application process that would be accessible to all banks. The interest subsidy would be provided via E-vouchers and Central Bank Digital Currency wallets.
To apply for the scheme, students have to first register and log in to the portal. They are required to complete the Common Education Loan Application Form by providing all the required information. After filling up the form, the applicant would be able to search for an educational loan based on their needs, eligibility, and preferences and then apply, accordingly.
Eligible Higher Education Institutions
The scheme would apply to all the government and private institutions ranked within the top 100 in the National Institutional Ranking Framework (NIRF) overall rankings, as well as those in category-specific and domain-specific lists. Additionally, all state government-run higher education institutions (HEIs) ranked between 101 and 200, along with all central government-managed institutions, would also be eligible. Further, all remaining HEIs under the central government will be considered. The list of eligible institutions would be updated annually based on the latest NIRF rankings.
Indian campuses of foreign educational institutions, foreign campuses of Indian educational institutions, and other foreign educational institutions will not be included.
As a rule, universities are supposed to have data for a minimum of three years for their courses to be eligible for consideration in the rankings. Therefore, institutions offering courses that have been running for only two years would not be included in the list.
Although the government has stated that the state government-run HEIs ranked between 101 and 200 would be included in the scheme, at present, the NIRF has ranked only 50 state government-run HEIs across all categories. Additionally, the 2024 Rankings have introduced new categories, such as skill and open universities. However, these new categories are not presently eligible for inclusion under the scheme.
Comparison of Vidya Lakshmi Scheme with Earlier Loan Schemes
Income Groups Previous schemes like the Central Sector Interest Subsidy Scheme (CSIS) and the Credit Guarantee Fund Scheme for Educational Loans (CGFSEL) under Pradhan Mantri Uchchatar Shiksha Protsahan scheme, primarily targeted low-income groups. In contrast, the PM—Vidyalaxmi scheme has expanded its coverage to include middle income families, irrespective of factors such as caste. Additionally, the new scheme features a higher income cut-off as compared to earlier schemes.
Eligible Institutions For the CSIS and CGFSEL schemes, eligible institutions had to be accredited by the National Assessment and Accreditation Council (NAAC) and the National Board of Accreditation (NBA). Institutions approved by the Medical Council of India and the Bar Council of India, along with those granted the status of national importance as centrally funded institutions, were also considered. This resulted in a total of around 20,000 institutions including 820 NAAC universities; 15,501 colleges, and 3,348 NBA institutions. In contrast, the new scheme has significantly reduced the number of eligible institutions, covering only 860 NIRF-ranked institutions.
Conclusion
Overall, the PM-Vidyalaxmi Scheme aims to build on the government’s past efforts to expand access to higher education and to provide financial support to students, enabling them to pursue their academic dreams without the constraints of financial limitations.
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