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Pradhan Mantri Vidyalaxmi Scheme
Context
Education loans have been growing at a notable pace in recent years and a further boost is expected with the newly launched ‘Pradhan Mantri Vidyalaxmi scheme’.
What is the PM Vidyalaxmi Scheme?
- The PM Vidyalaxmi Scheme is a new initiative launched by the government to provide financial support to students for higher education.
- It aims to ensure that financial barriers do not prevent deserving students from pursuing their dreams of studying at top institutions.
- Under this scheme, eligible students can get collateral-free, guarantor-free loans to cover tuition fees and other expenses for their courses.
- Eligibility: The scheme is available to students who have been admitted to Quality Higher Educational Institutions (QHEIs), which are ranked highly according to the National Institutional Ranking Framework (NIRF).
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- Top 100 Institutions (Overall, Category, Domain-specific NIRF rankings): These are the leading government and private institutions.
- State Government Institutions (Ranked 101-200): These institutions also qualify.
- All Institutions under the Central Government: These are automatically eligible.
- Each year, the list of eligible institutions will be updated based on the latest NIRF rankings. The scheme will initially include 860 institutions, covering over 2 million students.
Key Benefits of the Scheme
- Collateral-Free Loans: Students can get loans to cover the full cost of their education, including tuition fees, without needing any security or a guarantor.
- Loan Guarantee: For loans up to Rs 7.5 lakh, there will be a 75% credit guarantee for the banks, reducing their risk of defaults.
- Interest Subsidy:
- Students with a family income of up to Rs 8 lakh (who are not eligible for other government scholarships) can get a 3% interest subsidy on loans up to Rs 10 lakh.
- The subsidy will apply during the moratorium period (the period before the loan repayments begin).
- This subsidy will benefit 100,000 students per year, with priority given to those from government institutions and those pursuing technical/professional courses.
- The government has allocated a budget of Rs 3,600 crore for the period from 2024-25 to 2030-31.
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