The Union Cabinet headed by Prime Minister Narendra Modi has cleared the PM Vidyalaxmi scheme, which will be a central sector scheme that would be supporting students having higher education pursuits.
PM Vidyalaxmi Scheme To Support 7 Lakh Students Financially
Finance minister Nirmala Sitharaman first announced the scheme in her Union Budget speech earlier this year. It is now allocated Rs 3,600 crore for the period between 2024-25 to 2030-31.
An estimated 7 lakh students would benefit from the PM Vidyalaxmi Scheme every year as it would provide collateral-free educational loans and interest subsidies while the student was studying in Indian institutions.
It stems from National Education Policy 2020 and is dedicated to providing quality higher education opportunities for those meritorious students across the nation. Students are able to get loans of up to Rs 10 lakh, while a 3 percent interest subsidy is also available during the moratorium period for these loans.
An estimated 1 lakh students from lower-income groups would benefit from this interest subsidy. It would give them enormous relief concerning financial relief. Loans drawn under this scheme will not be collateral-based; neither will a guarantor be required. This will reduce the burden on the family and push students to utilize their aspirations for education.
A unified digital platform called the “PM-Vidyalaxmi” portal is to be launched to streamline the application process and bring in greater transparence in the deal. This particular portal will make applying for educational loans and interest subsidies easier through participating banks, e-vouchers, and Central Bank Digital Currency (CBDC) wallets while processing their interest subsidy payments, reinforcing the government’s commitment to digital finance and transparency.
The PM Vidyalaxmi Scheme would ensure a smooth experience for students with less hassle in attaining financial assistance without the complications commonly associated with loan disbursal processes.
Credit guarantee mechanism would be provided to facilitate the banking sector to make educational loans with a special regard for loans up to Rs 7.5 lakh. The key proviso is a 75 percent guarantee on outstanding defaults that is supposed to coax the banks into active participation under the PM Vidyalaxmi scheme by providing them a lower lending risk.
Eligibility for the PM Vidyalaxmi Scheme is based on family income but has a cap of Rs 8 lakh annually. Those students from families with income below this threshold, not being eligible for other government scholarships or interest benefits would get 3% interest subsidy on loans up to Rs 10 lakh during the moratorium period.
The PM Vidyalaxmi Scheme focuses on technical and professional education-a step where the government emphasizes improving India’s skilled workforce. It gives importance to students coming from government institutions and programs that are high in employability so that a strong human resource is strengthened in critical sectors of the economy.
A highlight feature of PM Vidyalaxmi, it is, by NEP 2020 guidelines, that puts more emphasis on quality higher education institutions. The scheme will only target those students who are currently passing studies in an institution which comes under the category of National Institutional Ranking Framework’s top 100 categories.
That is to say, it will benefit government institutions as well as private institutions. All state-run institutions falling between 101 to 200 and all central government institutions will be eligible for this scheme. Thus, those students continuing education in the top institution will also benefit from this scheme and there will be maximum educational standards and academic proficiencies.
While NIRF rankings can cover more than 22 lakh students every year across 860 institutions, this scheme ensures that by making the institutions qualified to participate in the scheme, the government is going to send more resources to those institutions which have proved in terms of quality educational backgrounds so that the money spent through this scheme would reach the institutions that remain at the top rung of excellence in academics.
The PM Vidyalaxmi scheme is a very appreciable step toward the democratization of higher education becoming more accessible, affordable, and inclusive to all citizens, primarily those from financially underserved backgrounds.
This integrated package of measures-from the simplified online application process to the exclusion of collateral, interest subvention, and credit guarantee to participating banks-reflects the intent of the government in terms of removal of barriers to education through finances.
The experts consider it a much-needed initiative as the current state of the financial woes being faced by most of the students and families can’t be ignored, considering the constant surge in higher education cost. The PM Vidyalaxmi scheme would ensure more students get an opportunity for loans and subsidies, fulfilling the dreams of millions of young minds.
With the clearance from the Cabinet, PM Vidyalaxmi promises to reach students soon and roll out much-needed financial assistance in the lives of students in India, bringing quality education closer than ever.
