Cabinet Approves ₹3,600 Crore PM Vidyalaxmi Scheme to Fund Education Loans for 22 Lakh Students Annually

A central feature of PM Vidyalaxmi is a special loan product that provides collateral-free, guarantor-free loans with a credit guarantee of up to 75% on loans up to ₹7.5 lakh.

Union Cabinet has approved a new scheme that offers collateral-free loans with up to 75% government guarantee and 3% interest subvention for students from families earning up to ₹8 lakh, aiming to boost access to top higher educational institutions across India.

In a significant move to enhance access to higher education, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the PM Vidyalaxmi scheme. This new Central Sector scheme aims to ensure financial support for meritorious students, so that financial limitations do not prevent them from pursuing quality education in India’s top institutions. Building on the National Education Policy, 2020, PM Vidyalaxmi will help students gain collateral-free, guarantor-free education loans through a streamlined digital process.

Under the scheme, more than 22 lakh students admitted annually to 860 top-ranking institutions, as per NIRF rankings, will be eligible. This includes the top 100 institutions across various categories, as well as state government HEIs ranked in the 101-200 range, and all central government institutions. The eligibility list will be updated annually to ensure access to top-tier institutions.

A central feature of PM Vidyalaxmi is a special loan product that provides collateral-free, guarantor-free loans with a credit guarantee of up to 75% on loans up to ₹7.5 lakh. Additionally, students from families with annual incomes of up to ₹8 lakh will receive a 3% interest subvention on loans up to ₹10 lakh during the moratorium period, benefiting one lakh students per year, with preference given to those pursuing technical or professional courses at government institutions. A budget of ₹3,600 crore has been allocated to support 7 lakh students over the next six years.

The scheme will operate through the “PM-Vidyalaxmi” unified portal, where students can apply for loans and interest subvention in a single application process accessible to all participating banks. Payments will be facilitated through E-vouchers and Central Bank Digital Currency (CBDC) wallets, ensuring efficiency and transparency.

PM Vidyalaxmi complements existing programs such as the PM-USP’s Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL). Together, these initiatives provide comprehensive financial support for students pursuing higher education and professional courses across India, reinforcing the government's commitment to making quality education accessible to all meritorious students.