PM-Vidyalaxmi Scheme

Source: This post on PM-Vidyalaxmi Scheme has been created based on the article “Cabinet approves PM-Vidyalaxmi scheme to provide financial support to meritorious students so that financial constraints do not prevent any youth of India from pursuing quality higher education” published in PIB on 7th November 2024.

Why in news?

The Union Cabinet has approved the PM Vidyalaxmi scheme.

About the PM-Vidyalaxmi Scheme

1. It is a central initiative aimed at supporting meritorious students financially, ensuring that economic constraints do not hinder access to higher education.

2. Objective: This scheme is rooted in the National Education Policy (NEP) 2020, underscores the policy’s emphasis on making financial aid available to deserving students in both public and private higher education institutions (HEIs).

3. Under PM Vidyalaxmi, any student admitted to a recognized Quality Higher Education Institution (QHEI) will be eligible for a collateral-free, guarantor-free loan from banks and financial institutions to cover full tuition fees and related course expenses.

4. The scheme applies to institutions ranked within the top 100 in the National Institutional Ranking Framework (NIRF) across various categories, including state government HEIs in the 101-200 range and all central government institutions, covering an initial 860 QHEIs with potential to benefit over 22 lakh students.

Digital Payment Solutions: Interest subvention will be disbursed via E-vouchers and Central Bank Digital Currency (CBDC) wallets, ensuring secure, digital payments.

5. PM Vidyalaxmi complements existing schemes like the Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL) under PM-USP, offering a holistic support system for deserving students in quality institutions.

6. Credit Guarantee: Loans up to ₹ 7.5 lakhs will have a 75% credit guarantee from the Government of India to support banks in offering coverage to more students.

7. Interest Subvention Benefits: For Students with Annual Family Income up to ₹ 8 Lakhs:

i) 3% interest subvention on loans up to ₹ 10 lakhs during the moratorium period.

ii) Priority for students from government institutions, especially those in technical/professional courses. It covers 1 lakh students annually.

8. For Students with Annual Family Income up to ₹ 4.5 Lakhs: Full interest subvention during the moratorium period on loans up to ₹ 10 lakhs under PM-USP.

9. Implementation Mechanism: A mission-mode mechanism will facilitate the scheme’s rollout, ensuring easy access and high coverage. Students can apply through a unified portal where applications and interest subvention can be processed.

UPSC Syllabus: Schemes and Programmes