Context: The RBI report has highlighted that Education loans have been growing at a notable pace in recent years and in this regard, a further boost is expected with the newly launched ‘Pradhan Mantri Vidyalaxmi Scheme’.
Relevance of the topic: Prelims- Key facts about the scheme and its provisions.
About PM Vidyalaxmi Scheme:
- It is a Central Sector scheme under the Ministry of Education that seeks to provide financial support to meritorious students so that financial constraints do not prevent them from pursuing higher studies.
- The initiative stems from the National Education Policy 2020, which had recommended that financial assistance should be made available to meritorious students through various measures in both public and private Higher Education Institutions (HEIs).
Key features:
- Institutions Covered: Meritorious students of the top 860 Higher Education institutions, including-
- Top 100 HEIs (both Government + Private) ranked in the National Institutional Ranking Framework (NIRF).
- State Govt HEIs (ranked 101–200 in NIRF).
- All Central Government Institutions: ~660 institutions.
- Digitalisation: Students can apply through the Vidyalaxmi portal, which links major public and private banks. The portal provides a simplified digital application process and facilitates loan tracking.
- Loan conditions:
- Collateral free, guarantor free loan to cover the full amount of tuition fees and other expenses related to the course.
- Loans up to ₹ 7.5 lakhs are backed by a 75% credit guarantee from the Government of India, encouraging banks to expand coverage.
- For students with annual family income up to ₹ 8 lakhs, the scheme will provide 3% interest subvention on loans up to ₹ 10 lakh.
- Students with up to Rs. 4.5 lakhs annual family income are eligible for full interest subvention.
- Sync with other schemes: This will supplement the already existing Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL), schemes under the Pradhan Mantri Uchchatar Shiksha Protsahan (PM-USP), being implemented by the Department of Higher Education.