PM Vidyalaxmi scheme for collateral-free loans to students approved

Students entering top-ranked higher educational institutions will now be eligible for collateral-free loans to cover the full amount of tuition fee and hostel expenses related to their courses.

The Cabinet chaired by PM Narendra Modi on Wednesday approved a new scheme — PM Vidyalaxmi — to ensure no student is deprived of higher education for want of finances. The scheme will apply to 22 lakh students who annually enter 860 top-ranked quality higher educational institutions of the country. Of these, around 637 are government institutes and the rest private.

Hallmark of the scheme is that it expands the current higher education loan framework and offers collateral-free and guarantor-free loans. At present full interest subvention on loans is already offered to students with up to Rs 4.5 lakh annual family income.

The scheme now says that for students with up to Rs 8 lakh annual family income, the Centre will provide 3 per cent interest subvention on loans up to Rs 10 lakh. Nearly one lakh students will fall in this bracket annually. The scheme will grant preference to students from government institutions and those opting for technical and professional courses.

The Education Ministry will create a unified portal “PM Vidyalaxmi” on which students will be able to apply for the loan as well as interest subvention through a simplified application process.

Seven lakh students are expected to get the benefit of interest subvention during the period.