The Pradhan Mantri Vidyalaxmi (PM-Vidyalaxmi) Scheme has emerged as a major initiative of the Ministry of Education aimed at making quality higher education more accessible by providing collateral-free and guarantor-free education loans to meritorious students admitted to leading higher education institutions across the country. Complemented by targeted interest subvention for eligible families, the scheme seeks to ensure that financial constraints do not prevent deserving students from pursuing higher education.
Approved by the Union Cabinet on November 6, 2024, the scheme aligns with the objectives of the National Education Policy (NEP) 2020 and contributes to Sustainable Development Goal (SDG) 4, which focuses on ensuring inclusive and equitable quality education for all.
Addressing financial barriers to higher education
India has witnessed significant growth in higher education enrolment, with the Gross Enrolment Ratio (GER) increasing from 23.7 per cent in 2014-15 to 30 per cent in 2023-24. However, the cost of education at premier institutions has remained a challenge for many meritorious students despite the availability of education loans.
PM-Vidyalaxmi addresses this gap by offering collateral-free and guarantor-free education loans to students admitted on merit to designated Quality Higher Educational Institutions (QHEIs). The scheme also provides a 3 per cent interest subvention during the moratorium period for students whose annual family income is up to ₹8 lakh.
The entire process, from application to loan tracking, interest subvention claims and grievance redressal, is managed through a unified digital portal designed to make the system transparent and student-friendly.
Wide coverage of institutions and courses
The scheme currently covers 1,425 Quality Higher Educational Institutions, including public and private institutions selected primarily on the basis of National Institutional Ranking Framework (NIRF) rankings. Admissions made through management quota, NRI quota and similar categories are not eligible.
All degree and diploma programmes offered by eligible institutions are covered under the scheme.
Students can apply irrespective of their family income for education loans, while interest subvention is linked to specified income criteria.
Collateral-free loans with government-backed guarantee
One of the key features of PM-Vidyalaxmi is the provision of education loans without requiring collateral or third-party guarantees.
The loan amount is determined based on tuition fees, hostel and mess charges, institutional fees, living expenses and the cost of a reasonable-quality laptop.
To encourage lending institutions, the Government provides a 75 per cent credit guarantee for loans up to ₹7.5 lakh, reducing the risk for banks and expanding access to educational finance.
Interest rates under the scheme are capped at the participating bank’s Externally Benchmarked Lending Rate (EBLR) plus 0.5 per cent, making them lower than standard education loans. Banks may also offer an additional one per cent concession if students service the interest during the study and moratorium period.
The repayment period extends up to 15 years, excluding the course duration and one-year moratorium period.
Education loans are provided through Scheduled Banks, Regional Rural Banks and Cooperative Banks participating in the scheme.
Interest support for eligible students
PM-Vidyalaxmi complements the existing Pradhan Mantri Uchchatar Shiksha Protsahan Central Sector Interest Subsidy Scheme (PM-USP CSIS).
Under PM-USP CSIS, students pursuing technical and professional courses with annual family income up to ₹4.5 lakh receive full interest subsidy during the moratorium period on education loans up to ₹10 lakh.
PM-Vidyalaxmi extends support further by providing 3 per cent interest subvention during the moratorium period on loans up to ₹10 lakh for students admitted to designated QHEIs whose annual family income does not exceed ₹8 lakh.
The interest subsidy under PM-Vidyalaxmi is available for up to one lakh fresh students every year, while the Government has allocated ₹3,600 crore for the scheme between 2024-25 and 2030-31. Around seven lakh students are expected to benefit during this period.
Students already receiving other Central or State Government scholarships, interest subvention schemes or fee reimbursement are not eligible to receive additional interest subvention under PM-Vidyalaxmi.
Eligibility criteria
To avail the benefits, students must secure admission on merit to a designated Quality Higher Educational Institution; remain enrolled in the course and maintain satisfactory academic performance; and register using Aadhaar through the scheme portal.
Interest subvention and credit guarantee benefits can be availed only once for an undergraduate, postgraduate or integrated course.
Students who discontinue their course midway or are expelled on disciplinary or academic grounds become ineligible for further benefits.
Digital platform simplifies access
The scheme operates through a dedicated online portal that enables students to submit common loan applications, choose participating banks, track application status, apply for interest subvention and raise grievances.
Eligible students receive interest subsidy through the PM Vidyalaxmi Digital Rupee App (CBDC Wallet), from where the subsidy is transferred directly to their education loan account.
As of July 22, 2026, the portal had 35,777 active CBDC wallets, through which subsidies worth ₹57.66 crore had been disbursed.
For FY 2025-26, 414,844 claims amounting to ₹892.81 crore were received under PM-USP CSIS at Canara Bank, significantly reducing the repayment burden on student beneficiaries.
Growing adoption across the country
The PM-Vidyalaxmi portal received 645,514 education loan applications across all education loan schemes during FY 2025-26.
Of these, 110,667 applications were submitted under PM-Vidyalaxmi.
According to the scheme dashboard, 70,852 loans have been sanctioned, and 67,728 loans have already been disbursed.
The portal provides real-time information on applications, approvals and processing status, helping improve transparency and efficiency.
Promoting gender and social inclusion
The scheme is designed to make higher education more accessible across all sections of society.
During FY 2025-26, 368,742 men and 276,764 women applied for education loans; 203,438 loans were sanctioned for men; and 158,629 loans were sanctioned for women.
The scheme has also witnessed participation from students belonging to Economically Weaker Sections (EWS), Scheduled Castes (SC), Scheduled Tribes (ST), Other Backward Classes (OBC), Non-Creamy Layer OBCs, Persons with Disabilities (PwD) and the General category, reflecting its broad-based and inclusive reach.
Advancing educational equity
By combining collateral-free education loans with targeted interest support and a fully digital application process, PM-Vidyalaxmi seeks to reduce financial barriers to higher education and improve access for deserving students across the country.
The initiative supports the goals of the National Education Policy 2020 by promoting equitable access to quality education while contributing to the creation of a skilled and future-ready workforce aligned with India’s long-term development objectives.
