PM Vidyalaxmi Scheme: Financial Support for Meritorious Students, Eligibility, Benefits, and How to Apply

In a major step toward promoting inclusive higher education, Union Cabinet, led by Prime Minister Narendra Modi, has approved the "PM Vidyalaxmi" scheme. This initiative, which aligns with the National Education Policy (NEP) 2020, aims to ensure that financial hurdles do not prevent meritorious students from pursuing higher education. The scheme will provide easier access to loans for deserving students, particularly those from financially disadvantaged backgrounds, ensuring a more equitable education system across India.

What is PM Vidyalaxmi?

The PM Vidyalaxmi scheme is a direct outcome of the National Education Policy (NEP) 2020, which prioritizes financial assistance for deserving students. NEP recommended various measures to make quality education accessible, both in public and private Higher Education Institutions (HEIs). The Vidyalaxmi scheme aligns with this vision by offering collateral-free, guarantor-free education loans to students admitted to quality higher education institutions (QHEIs).

Eligible students will be able to secure funding to cover the full cost of their tuition and other educational expenses. The eligibility for institutions will be determined by the National Institutional Ranking Framework (NIRF), and initially includes institutions within the top 100 NIRF rankings across categories, as well as state government institutions ranked between 101 and 200. The list will be updated annually, beginning with approximately 860 institutions, offering potential access to more than 22 lakh students.

This loan system, designed to be completely digital and user-friendly, will eliminate the paperwork burden traditionally associated with loan applications. It provides an application process that is transparent and compatible with other systems, which should help students get funding more quickly.

Financial Structure and Benefits

To ensure students feel supported and secure in financing their education, the scheme offers multiple benefits. For loans up to Rs 7.5 lakh, the government will provide a 75% credit guarantee on outstanding defaults, reducing the risk for financial institutions and making them more inclined to extend loans to students. This ensures that no student has to compromise on their education due to financial limitations.

For students whose annual family income is up to Rs 8 lakh and who do not qualify for other government scholarships or interest subventions, the scheme offers a 3% interest subvention on loans up to Rs 10 lakh during the moratorium period. This subvention will support approximately one lakh students annually, with preference for those enrolled in government institutions or technical/professional programs. The government has allocated Rs 3,600 crore to support this interest subsidy from 2024-25 to 2030-31, with an estimated 7 lakh new students expected to benefit.

Application Process: PM-Vidyalaxmi Portal

In line with the government’s digitalization goals, the PM Vidyalaxmi scheme introduces a unified online portal, “PM-Vidyalaxmi,” where students can apply for loans and interest subventions. The portal will consolidate the application process across all banks, ensuring a smooth experience for applicants. Payments for interest subvention will be facilitated through E-vouchers and the Central Bank Digital Currency (CBDC) wallets, further promoting digital financial inclusion.

Direct Link to PM-Vidyalaxmi Portal

Aligning with Existing Educational Schemes​

The PM Vidyalaxmi scheme builds on existing government initiatives such as the Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL) under the PM-USP. Under CSIS, students with family incomes below Rs 4.5 lakh can receive full interest subvention on loans up to Rs 10 lakh during the moratorium period, provided they are enrolled in technical/professional courses. Together, PM Vidyalaxmi and PM-USP will offer a comprehensive support system, addressing a wide range of student needs for financial aid across the higher education spectrum.

PM Vidyalaxmi promotes educational equity and financial inclusion, directly addressing the objectives of NEP 2020. This initiative demonstrates the government’s commitment to empowering students to achieve their full potential, regardless of financial background.