PM VIDYA LAXMI SCHEME
Why in News?
- Recently, The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the PM-Vidyalaxmi scheme, which aims to provide financial support to meritorious students to pursue higher education without financial constraints.
- This scheme is a part of the government’s broader effort to maximize access to quality higher education for Indian youth.
- The initiative is aligned with the National Education Policy (NEP) 2020, which advocates for providing financial assistance to deserving students.
- The scheme will focus on providing collateral-free loans, interest subventions, and credit guarantees for education loans, enabling meritorious students to study in the country’s top educational institutions.
KEY FEATURES
- Target Group and Eligibility:
- Meritorious Students: Any student admitted to one of the top 860 quality higher educational institutions (QHEIs) in India, as determined by the National Institutional Ranking Framework (NIRF), is eligible for the scheme.
- The scheme covers both government and private institutions ranked in the top 100 in the NIRF, as well as government institutions ranked between 101-200.
- Annual Family Income:
- Students with a family income of up to ₹8 lakhs will benefit from 3% interest subvention.
- Students with a family income of up to ₹4.5 lakhs will be eligible for full interest subvention under the Central Sector Interest Subsidy (CSIS).
- Loan Amount and Financial Support:
- Loan Coverage: The scheme provides education loans to cover the full cost of tuition fees and other related expenses (e.g., accommodation, books).
- Collateral-Free Loans: Loans will be offered without collateral or guarantor requirements, making it accessible to a larger number of students.
- Loan Amount Limit: Students can apply for loans up to ₹10 lakh (for both domestic and overseas education).
- For loans up to ₹7.5 lakh, the government will provide a 75% credit guarantee to banks to reduce the risk of default.
- Interest Subvention:
- 3% Interest Subvention: Students with an annual family income of up to ₹8 lakh, not eligible for other government subsidies, will receive 3% interest subvention on loans up to ₹10 lakh during the moratorium period.
- Full Interest Subvention for Low-Income Students: Students with an income of up to ₹4.5 lakh annually, pursuing technical and professional courses, will receive full interest subvention under the existing Central Sector Interest Subsidy (CSIS)
- Coverage: The scheme will benefit 1 lakh students every year with the interest subvention, with an expected 7 lakh students to benefit by the end of the scheme (2024-2030).
- Application Process:
- Unified Digital Portal: The entire process will be streamlined and digital, with a dedicated online portal—PM-Vidyalaxmi. Students can apply for loans and interest subventions directly through this portal, which will be transparent, student-friendly, and inter-operable with all banks.
- Simplified Application: The application process will be simple, and E-vouchers and Central Bank Digital Currency (CBDC) wallets will be used for the payment of interest subvention, ensuring a seamless experience.
- Additional Support Mechanisms:
- Loan Disbursement and Coverage: The scheme will cover educational loans for students enrolled in quality higher educational institutions. The scope of the scheme includes technical, professional, and general education
- State and Central Government Institutions: All central government institutions, as well as top-ranked state institutions, are eligible under the scheme.
BUDGET & FINANCIAL OUTLAY
- A total outlay of ₹3,600 crore has been allocated for the period from 2024-25 to 2030-31 to support the implementation of the scheme.
- This funding will provide financial assistance to around 7 lakh students, supporting both the loan disbursement and interest subvention components.
HOW WILL IT COMPLEMENT OTHER SCHEMES?
The PM-Vidyalaxmi scheme builds on existing education financing mechanisms and further strengthens the government’s commitment to providing access to education through financial inclusion. Specifically, it will work in conjunction with:
1. Central Sector Interest Subsidy (CSIS):
- Under this existing scheme, students from families with an income of up to ₹4.5 lakh who are pursuing technical and professional courses from approved institutions get full interest subvention during the moratorium period.
2. Credit Guarantee Fund Scheme for Education Loans (CGFSEL):
- The 75% credit guarantee under PM-Vidyalaxmi will reduce the risk for financial institutions and banks, encouraging them to offer loans to students without collateral.
Together, these schemes will ensure that all deserving students, particularly those from economically weaker sections, have access to quality higher education without the barrier of financial constraints.
SIGNIFICANCE
- Promoting Financial Inclusion in Education:
- By offering collateral-free loans and interest subvention schemes, the PM-Vidyalaxmi initiative significantly reduces the financial burden on students and their families, making higher education more accessible, particularly for those from low- and middle-income backgrounds.
- Boosting Higher Education Enrollment:
- The scheme targets more than 22 lakh students annually, covering students across diverse fields and institutions. This will help increase access to quality education and create a more skilled workforce in India.
- Digital and Transparent Application System:
- The digital nature of the scheme ensures greater transparency, reduces delays, and simplifies the loan application process for students, enhancing their overall experience.
- Alignment with National Education Policy (NEP) 2020:
- PM-Vidyalaxmi directly contributes to the NEP 2020 vision of increasing access to higher education for all deserving students by ensuring that financial limitations do not hinder their academic aspirations.
- Support for Merit-Based Admissions:
- The scheme encourages merit-based admissions in the country’s top educational institutions, making it a progressive step towards supporting excellence and skill development in higher education.
Note: Connect with Vajirao & Reddy Institute to keep yourself updated with latest UPSC Current Affairs in English.
Note: We upload Current Affairs Except Sunday.
