The Pradhan Mantri Vidyalaxmi Scheme (PM-Vidyalaxmi) provides collateral-free and guarantor-free education loans to meritorious students admitted to designated Quality Higher Educational Institutions (QHEIs) in India. Approved by the Union Cabinet on 6 November 2024, the scheme aims to ensure that financial constraints do not prevent any meritorious student from pursuing higher education at top-ranked institutions.

Overview

PM-Vidyalaxmi is a mission-mode intervention stemming from the National Education Policy (NEP) 2020. It contributes to the goals of SDG 4 and NEP 2020 by advancing inclusive and equitable quality education and promoting lifelong learning opportunities. The scheme operates through a unified, fully digital portal where students can apply for education loans, track application status, claim interest subvention, and raise grievances.

Funding and Benefits

• Collateral-free, guarantor-free loans: Students admitted to eligible QHEIs can obtain education loans without furnishing collateral or third-party guarantees. There is no upper limit on the loan amount; it depends on the course fee, associated expenses (mess, hostel, laptop, living expenses), and other fees charged by the QHEI.
• Credit guarantee: The Government of India provides a 75% credit guarantee for loans up to ₹7.5 lakh to encourage lending institutions to extend loans.
• Interest subvention: A 3% interest subvention on loans up to ₹10 lakh is provided during the moratorium period (course period plus one year) for students with an annual family income up to ₹8,00,000. If the loan amount exceeds ₹10 lakh, interest subvention is provided on the principal amount up to ₹10 lakh only.
• Interest rate cap: Interest rates are capped at the individual bank’s Externally Benchmarked Lending Rate (EBLR) + 0.5%. Banks may provide up to 1% additional interest concession if interest is serviced during the study and moratorium period.
• Repayment period: Up to 15 years, excluding a moratorium period of the course period plus one year.
• Tax benefits: Tax benefits on interest paid under Section 80E are available.
• Budget allocation: ₹3,600 Crores from 2024-2025 to 2030-2031. An estimated 7 lakh fresh students are expected to benefit from interest subvention over the seven-year period.
• Annual slots for interest subvention: A maximum of one lakh students per year are eligible for the 3% interest subvention.

Eligibility

• Student eligibility: The scheme is available to students who have secured merit-based admission through competitive exams in any of the designated QHEIs in India. It covers all degree and diploma courses. Students from all income categories are eligible to apply for loans. To avail interest subvention, the annual family income must be less than ₹8,00,000.
• Additional conditions: Applicants must register through Aadhaar, remain enrolled in their courses, and maintain satisfactory academic performance. The applicant must not discontinue the course midway or be expelled. Interest subvention and credit guarantee benefits are available only once for undergraduate, postgraduate, or integrated courses.
• Institutional eligibility: QHEIs are shortlisted based on NIRF rankings. Currently, 1,425 institutions are covered, including:
  • Top 100 ranked HEIs in overall/category-specific/domain-specific NIRF rankings.
  • Top 200 ranked HEIs under State/Union Territory governments in the latest NIRF rankings.
  • All remaining HEIs under the Government of India.
• Exclusions: Management quota, NRI quota admissions are not eligible. Indian campuses of foreign education institutions, foreign campuses of Indian institutions, and foreign education institutions are not covered. Students availing any other Central/State Government scholarship, interest subvention scheme, or fee reimbursement are not eligible for interest subvention under PM-Vidyalaxmi.

Application Process

The scheme operates through a dedicated portal that enables common loan applications, bank selection, tracking of application status, interest subvention requests, and digital processing. Once a loan is sanctioned and disbursed, eligible students can apply for interest subvention based on family income. The subsidy amount is credited to the beneficiary’s PM Vidyalaxmi Digital Rupee App (CBDC Wallet) and subsequently transferred to the education loan account. The portal also provides a platform to raise and monitor grievances.

Deadline and Timeline

The scheme is ongoing. The budget allocation covers the period from 2024-2025 to 2030-2031. In FY 2025-26, 110,667 education loan applications were received under PM-Vidyalaxmi, of which 70,852 loans were sanctioned and 67,728 loans disbursed.