PM Vidyalaxmi: Here Is All You Need To Know About This Collateral-Free Education Loan Scheme

Every year, lakhs of students clear tough competitive exams, with the vision to get into their dream higher studies institutions, only to realise that money is the next big obstacle. The Pradhan Mantri Vidya Laxmi scheme was introduced with the purpose of mitigating this hurdle for students. Approved by the Union Cabinet in November 2024, this scheme offers education loans with income-based interest rates and without the need for collateral or a guarantor.

This Scheme covers admissions to 860 Quality Higher Education Institutions (QHEIs) across the country. According to the central government, this scheme benefits more than 22 lakh students every year, including around 7 lakh fresh students who are offered a 3 per cent interest rate, especially for loans up to Rs 10 lakh during the moratorium.

Who Is Eligible

Students who secure admission to eligible institutions through merit-based selection can apply for the loan. The scheme is available for degree as well as diploma courses.

Students from all income groups are eligible to apply. However, only those admitted through entrance examinations or merit-based admissions can apply for the PM Vidyalaxmi scheme. Those admitted under the management quota or other quota-based admissions are not eligible.

The amount of loan sanctioned depends on the course fee and related expenses. There is no fixed upper limit on the loan amount under the scheme.

What Benefits Does The Scheme Offer

One of the key features of PM Vidyalaxmi is that students do not have to provide collateral or arrange for a guarantor to get the loan.

For education loans of up to Rs 7.5 lakh, the government provides a 75 per cent credit guarantee to banks.

The scheme also offers interest support based on the family's annual income. Students whose family income is up to Rs 4.5 lakh are eligible for a 100 per cent interest subsidy during the moratorium period for approved technical and professional courses.

Students with an annual family income between Rs 4.5 lakh and Rs 8 lakh can get a 3 per cent interest subvention on education loans of up to Rs 10 lakh during the moratorium period.

Education loans are available through Scheduled Commercial Banks, Regional Rural Banks and Cooperative Banks.

How Can Students Apply

Applications can be submitted through the PM Vidyalaxmi Unified Portal.

Students must register on the portal by providing basic details such as their name, Aadhaar number, email address and mobile number. After logging in, they must fill in details about the course and institution, choose the bank from which they want the loan and submit the application.

The portal also allows applicants to check the status of their application and receive updates on loan approval.

Interest Rates And Repayment

The interest rate is not fixed under the scheme. Depending on the bank's repo-linked lending rate, it generally ranges from 6.85 per cent to 15 per cent.

The repayment period can be stretched up to 15 years, excluding the moratorium period. If the loan amount exceeds a threshold that banks have set, lenders may ask for a life insurance policy for the student borrower. If the student agrees, the insurance premium may be included in the education loan amount.