Educating India's young population

The Vidyalaxmi scheme seeks to democratise higher education by allowing young Indians to choose a quality college of their choice

- Pramath Raj Sinha

On November 6, 2024, the Union Cabinet approved the path-breaking PM Vidyalaxmi scheme to financially support meritorious students who secure admission to India's top higher education institutions. In one stroke, it offers possibilities for a generation of young Indians to choose a high-quality college of their choice. By providing collateral-free, guarantor-free education loans, and interest subventions by income level, the scheme aims to cover over 22 lakh students (roughly 22% of all students enrolling in colleges each year) enrolling in the top 860 higher education institutions - across private, state-run and centrally governed institutions - based on the National Institutional Ranking Framework (NIRF). Students who apply for a loan amount up to ₹7.5 lakh will be eligible for a credit guarantee of 75%. Students with a family income of up to ₹8 lakh who are not eligible for benefits under any other government scholarships and interest subventions, will receive a 3% interest subvention for a loan amount up to ₹10 lakh during the moratorium period.

The interest subvention is set to support one lakh students every year, with a preference for students from government institutions who opt for technical or professional courses. This intervention is in addition to the PM Uchchatar Shiksha Protsahan Central Sector Interest Subsidy (USP CSIS) Scheme where students with an annual family income of up to ₹4.5 lakh, pursuing technical or professional courses from approved institutions, get full interest subvention for education loans up to ₹10 lakh during the moratorium period.