PM Vidyalaxmi Scheme to provide collateral-free loans for economically weaker students


In a major step to support deserving students from economically disadvantaged backgrounds, the Union Cabinet on Wednesday approved the PM Vidyalaxmi scheme, aimed at easing financial barriers for students seeking higher education.

This scheme, part of the National Education Policy (NEP) 2020, offers collateral – and guarantor-free loans up to Rs 10 lakh for students admitted to top-ranking Higher Education Institutions (QHEIs) across India.

Union Minister for Railways, Information, and Broadcasting Ashwini Vaishnaw announced that the scheme would provide full coverage for tuition and other course-related expenses. Eligible students from families with an annual income below ₹8 lakh can apply.

“Our goal is to ensure that financial limitations do not stand in the way of anyone pursuing higher education,” said Vaishnaw, adding that the scheme aims to support 100,000 students per year, with priority given to government institution students in technical or professional fields.

The scheme includes a 75 per cent credit guarantee on defaulted loans up to Rs 7.5 lakh, which will enable banks to offer loans with greater confidence. Further, a 3 per cent interest subsidy will be available for loans up to Rs 10 lakh during the moratorium period for students not covered by other scholarships or subvention schemes.

With an outlay of Rs 3,600 crore from 2024-25 to 2030-31, the program is expected to benefit 7 lakh new students over this period. Eligibility will be based on rankings, with institutions within the top 100 in the National Institutional Ranking Framework (NIRF) considered. Currently, 860 institutions meet the quality criteria set under QHEIs.

To streamline the process, the Department of Higher Education will launch a unified PM-Vidyalaxmi portal, where students can apply for loans and interest subventions through a simplified process accessible by all banks. Payment of subsidies will be facilitated via e-vouchers and Central Bank Digital Currency (CBDC) wallets, according to the Minister.