Education is the most powerful tool for building a strong nation, yet financial constraints often prevent bright and talented students from pursuing higher studies. To bridge this gap, the Government of India has introduced the Pradhan Mantri Vidyalaxmi (PM-Vidyalaxmi) Scheme, a Central Sector Scheme that ensures no deserving student is denied access to higher education due to lack of money.
The scheme, announced in the Union Budget 2024–25 and approved by the Cabinet on 6th November 2024, provides collateral-free and guarantor-free education loans to meritorious students admitted to the country’s best higher education institutions. With a simple and digital application process, PM-Vidyalaxmi aims to cover more than 22 lakh students every year through affordable education loans and government-backed financial assistance.
Objectives of PM-Vidyalaxmi Yojana
The scheme has been designed to remove the financial hurdles faced by students and empower them to pursue quality education. Its core objectives include:
- Ensuring universal access to higher education for meritorious students.
- Extending education loans without collateral or guarantor requirements.
- Supporting banks with government-backed credit guarantees for wider loan coverage.
- Providing interest subvention for students from economically weaker and middle-income families.
- Offering a transparent, digital, and student-friendly loan application process.
- Strengthening India’s knowledge economy by encouraging higher enrolment in Quality Higher Education Institutions (QHEIs).
Key Features of the Scheme
The PM-Vidyalaxmi Yojana stands out from regular education loan schemes because of its student-focused design. Some of the major features are:
- Collateral-Free & Guarantor-Free Loans
- Students do not need to provide property or third-party guarantees to avail loans.
- This reduces barriers for first-generation learners and those from middle or low-income families.
- Loan Amount Coverage
- There is no fixed cap on the maximum loan amount.
- The loan amount depends on actual course fees and associated expenses such as hostel charges, mess, laptop purchase, refundable deposits, and living costs.
- Credit Guarantee
- For loans up to ₹7.5 lakhs, the Government of India provides a 75% credit guarantee.
- This encourages banks to lend more freely without worrying about defaults.
- Interest Subvention (Subsidy)
- Students with family income up to ₹4.5 lakhs: Eligible for 100% interest subvention under the existing PM-USP CSIS scheme.
- Students with family income between ₹4.5 lakhs – ₹8 lakhs: Eligible for 3% interest subvention on loans up to ₹10 lakhs during the moratorium period.
- Wide Institutional Coverage
- The scheme is applicable to students admitted to 860 Quality Higher Education Institutions (QHEIs).
- These include NIRF-ranked institutions, central government universities, IITs, IIMs, NITs, AIIMS, and other reputed HEIs.
- Repayment Flexibility
- Students can repay loans over a period of 15 years (excluding moratorium).
- Moratorium = Course period + 1 year.
- Digital Application Portal
- A dedicated PM-Vidyalaxmi Portal ensures a paperless, student-friendly application system.
- All interest subvention claims and loan tracking will also be managed through this portal.
Eligibility Criteria
To ensure fairness and transparency, the following conditions have been laid down:
- Who can apply?
- Any student who has secured admission in a Quality Higher Education Institution (QHEI) through merit-based or competitive entrance exams.
- Students admitted via management quota or donation seats are not eligible.
- Courses covered:
- All degree and diploma programmes at undergraduate and postgraduate levels in QHEIs.
- Income criteria for interest subvention:
- Up to ₹4.5 lakhs annual family income → Full interest subsidy (under PM-USP CSIS).
- Between ₹4.5 lakhs – ₹8 lakhs → 3% interest subvention (under PM-Vidyalaxmi).
- Above ₹8 lakhs → Eligible for collateral-free loans, but no subsidy.
- Institutions covered:
- Only Indian higher education institutions recognized as QHEIs under the scheme.
- Foreign universities or Indian campuses abroad are not covered.
- Other exclusions:
- Students already receiving Central/State scholarships, fee reimbursement, or interest subsidy under other schemes cannot claim PM-Vidyalaxmi benefits simultaneously.
Quality Higher Education Institutions (QHEIs)
The government has prepared a list of 860 top institutions where students can avail this benefit. The criteria include:
- Top 100 institutions in NIRF overall and category/domain rankings.
- Top 200 state/UT government institutions listed in NIRF.
- All central government higher education institutions.
This ensures that only reputed and quality-driven institutions are covered, enhancing both student employability and loan repayment capacity after graduation.
Loan Amount & Expenses Covered
The scheme allows flexibility in determining the loan amount depending on actual needs. The loan can cover:
- Tuition fees and admission fees charged by QHEIs.
- Hostel and mess charges.
- Books, laptops, equipment, and uniforms.
- Laboratory fees and examination charges.
- Refundable and non-refundable deposits.
- A reasonable allowance for living expenses.
Example: A student admitted to a top engineering college with ₹2.5 lakhs annual fees, plus ₹1 lakh hostel charges, ₹50,000 laptop cost, and ₹80,000 living expenses can seek a loan of around ₹4.8 lakhs per year under PM-Vidyalaxmi.
Interest Subvention Benefits
One of the strongest benefits of PM-Vidyalaxmi is the interest subsidy during the moratorium period.
- For family income up to ₹4.5 lakhs
- Students pursuing technical/professional courses in NAAC/NBA-approved institutions are eligible for full interest waiver during the course + 1 year.
- For family income between ₹4.5 lakhs – ₹8 lakhs
- Students of all QHEIs are eligible for 3% interest subvention on loans up to ₹10 lakhs.
- The subsidy is valid only for the moratorium period.
- For loans above ₹10 lakhs
- Subsidy will be limited to the first ₹10 lakhs.
Credit Guarantee
The scheme also protects banks through a Credit Guarantee Fund for Education Loans (CGFSEL).
- For loans up to ₹7.5 lakhs → Government guarantees 75% of the outstanding default amount.
- This ensures students from lower and middle-income backgrounds are not denied loans due to lack of collateral.
Interest Rate under PM-Vidyalaxmi
- Banks can charge a maximum of EBLR + 0.5%.
- The interest rate under PM-Vidyalaxmi will always be lower than regular education loans of the same bank.
- Banks are free to offer even lower interest rates as per their internal policies.
Moratorium Period
Students are not burdened with immediate repayment.
- Moratorium = Course period + 1 year.
- Interest during this time will be calculated at a simple annual rate.
- Subsidy will apply as per eligibility (100% or 3%).
- After moratorium, students must repay principal + remaining interest over 15 years.
Sequential Selection for Interest Subvention
Since the 3% subsidy is capped at 1 lakh students per year, a transparent selection system is followed:
- Allocation of slots across states based on population (18–23 years age group).
- Priority order:
- Students in government HEIs.
- Technical/professional courses.
- Students from government schools (Class 12, then Class 10).
- Students from rural schools.
- Girl students.
This ensures fair representation and social inclusion.
Application Process
Students can apply digitally through the PM-Vidyalaxmi Portal, which integrates banks and government databases.
Documents Required:
- Aadhaar and PAN (KYC proof).
- Address proof.
- Income certificate from state public authority.
- Previous academic mark sheets.
- Entrance exam results (if applicable).
- Admission/offer letter and fee structure from the institution.
- Certificate from HEI if documents already submitted at admission.
Definition of Family for Income Criteria
For determining income eligibility, “family” includes:
- Student applicant.
- Parents (father & mother).
- Spouse (if married).
Courses Covered
- All degree and diploma programmes (Undergraduate, Postgraduate, and Integrated) offered by QHEIs.
- Both professional (engineering, medicine, law, management) and non-professional courses are included.
Benefits of PM-Vidyalaxmi for Students
- Access to collateral-free loans without parental property guarantees.
- Low interest rates with government-backed subvention.
- Opportunity to study in India’s best colleges without financial stress.
- Equal opportunity for students from urban and rural backgrounds.
- Support for 22 lakh students annually.
- Strong government backing → reduces fear of loan rejection.
