Modi Cabinet approves PM Vidyalaxmi: Check eligibility, maximum loan amount, interest subsidy

The Union Cabinet, led by Prime Minister Narendra Modi, has approved the PM Vidyalaxmi scheme to help meritorious students pursue higher education without financial barriers. The scheme, a major initiative under the National Education Policy (NEP) 2020, aims to support students with financial aid to attend top-quality institutions across India.

"A big boost to making education more accessible. The Cabinet has approved the PM-Vidyalaxmi scheme to support youngsters with quality education. It is a significant step towards empowering the Yuva Shakti and building a brighter future for our nation," PM Modi said on X.

Who will be eligible for PM Vidyalaxmi?

Under PM Vidyalaxmi, any student who secures admission in quality higher educational institutions (QHEIs) will be eligible for collateral-free, guarantor-free loans. The scheme will cover more than 860 institutions, including those ranked within the top 100 in the National Institutional Ranking Framework (NIRF) in overall, category-specific and domain-specific rankings. The scheme will also apply to the state government-run higher educational institutes ranked between 101 and 200 as well as all central government-run institutions.

More than 22 lakh students will be able to potentially avail benefits of PM Vidyalaxmi scheme, according to the ministry of education.

Students can borrow up to ₹7.5 lakhs without any need for collateral or guarantor. For loans up to this amount, the government will help cover 75% of any unpaid loan if the student is unable to pay it back.

"This will give support to banks in making education loans available to students under the scheme,” the ministry said.

Students from families with annual incomes up to ₹8 lakh, who aren’t receiving other scholarships, will be eligible to get a 3% interest subsidy on loans up to ₹10 lakh during the moratorium period. The interest subvention support will be given to one lakh students every year.

How the students will be shortlisted for interest subsidy

Preference will be given to students who are from government institutions and have opted for technical/ professional courses. A unified digital portal will streamline applications. The PM Vidyalaxmi portal will let students apply for loans and interest subsidies. Payment of interest subvention will be made through e-voucher and Central Bank Digital Currency (CBDC) wallets.

Together with the existing PM-USP programs, which offer full interest subsidies for students with family incomes up to ₹4.5 lakh, the government’s education support now covers a wider range of needs. By 2031, PM Vidyalaxmi aims to assist 7 lakh new students, backed by a ₹3,600 crore budget.