In News:

• The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the PM Vidyalaxmi scheme to provide financial assistance to meritorious students for higher education.
• Objective: The scheme aims to ensure that financial constraints do not hinder students from pursuing quality higher education.

Key Features of the scheme:

• Eligibility:
  • Students admitted to top 860 Quality Higher Education Institutions (QHEIs) are eligible.
  • Includes both government and private institutions, as per the NIRF (National Institutional Ranking Framework) rankings.
• Loan Provision:
  • Collateral-free and guarantor-free education loans for tuition fees and other course-related expenses.
  • Loans up to ?7.5 lakhs will have a 75% credit guarantee from the government to encourage banks to offer loans.
• Interest Subvention:
  • For students with an annual family income of up to ?8 lakhs (and not eligible for other scholarships or schemes), a 3% interest subvention will be provided on loans up to ?10 lakhs.
  • This subvention applies during the moratorium period (when repayment is deferred).
  • Preference for interest subvention is given to students in technical/professional courses and those from government institutions.
• Target Beneficiaries:
  • Around 22 lakh students are expected to benefit from the scheme annually.
  • The government has allocated ?3,600 crore for the period 2024-2025 to 2030-2031, with 7 lakh fresh students anticipated to receive the benefit each year.
• Digital Process:
  • A unified “PM-Vidyalaxmi” portal will allow students to apply for loans and interest subvention in a simplified, transparent, and digital manner.
• Payment Method:
  • Interest subvention will be paid via E-vouchers or Central Bank Digital Currency (CBDC) wallets.

Loan Product Features

• Collateral-free & Guarantor-free: Loans will be accessible without the need for collateral or a guarantor.
• Loan Coverage:
  • The scheme will cover full tuition fees and other related expenses.
• Eligibility Criteria:
  • Students enrolled in NIRF top 100 HEIs, state institutions ranked 101-200, and central government institutions are eligible.
  • The list of eligible institutions will be updated annually based on the latest NIRF rankings.

Government's Commitment

• The scheme is a part of the National Education Policy 2020’s vision to enhance access to quality education through financial support.
• Additional Support:
  • It complements the existing Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL) under PM-USP.
  • The CSIS scheme provides full interest subvention for students with an annual family income of up to ?4.5 lakhs, pursuing technical/professional courses.