Why in news?
Recently, the Union Cabinet chaired by PM Modi approved a new Central Sector Scheme, PM Vidyalaxmi, which seeks to provide financial support to meritorious students applying for higher education.
Students will now be eligible to get collateral-free, guarantor-free loans from banks and financial institutions to cover the full amount of tuition fees and other expenses related to the course.
What’s in today’s article?
- What is PM Vidyalaxmi?
- How it is different from past schemes?
- Challenges faced by PM Vidyalaxmi
What is PM Vidyalaxmi?
- About
- It is a new Central Sector initiative aimed at supporting meritorious students financially so they can pursue higher education without economic constraints.
- This scheme is rooted in the National Education Policy, 2020, which advocates for financial assistance to deserving students across both public and private Higher Education Institutions (HEIs).
- Objectives
- Ensure Financial Inclusion in Education: Enable meritorious students to pursue higher education without financial hurdles.
- Support Top Educational Institutions: Applicable only to top-quality HEIs as per the National Institutional Ranking Framework (NIRF).
- Provide Transparent and Digital Access: Use a fully digital, transparent, and student-friendly platform for loan processing and management.
- Features
- Loan Availability:
- Eligibility: Any student who secures admission to a Quality Higher Education Institution is eligible.
- Loan Terms: Collateral-free and guarantor-free loans will be offered through banks and financial institutions, covering the full amount of tuition and other course-related expenses.
- Institutional Coverage: Applies to institutions ranked in the NIRF top 100 (both government and private) and state government HEIs ranked in the 101-200 bracket, as well as all central government institutions.
- Coverage Scope: In the initial phase, 860 QHEIs qualify, potentially benefiting over 22 lakh students.
- Credit Guarantee Support:
- For loans up to ₹7.5 lakhs, a 75% credit guarantee on the outstanding amount is provided, encouraging banks to make education loans accessible to more students.
- Interest Subsidy:
- Eligibility: Students with an annual family income of up to ₹8 lakhs and not benefiting from other government scholarships or interest subvention schemes.
- Subsidy Terms: A 3% interest subvention on loans up to ₹10 lakhs during the moratorium period.
- Beneficiary Priority: Preference is given to students in government institutions and technical/professional courses.
How it is different from past schemes?
- Expanded Eligibility
- PM Vidyalaxmi covers middle-income families, unlike previous schemes which were limited to low-income groups, and offers benefits regardless of caste.
- Simplified Loan Process
- Students can apply through the Vidyalaxmi portal, which links to major public and private banks, simplifies the application process, and facilitates loan tracking.
- Focus on NIRF Rankings
- Eligibility is restricted to institutions ranked in the top 100 of the NIRF overall, category-specific, or domain-specific lists.
- For earlier schemes, the eligible institutions needed to be accredited with the National Assessment and Accreditation Council (NAAC) and the National Board of Accreditation (NBA).
- With 820 universities of NAAC and 15,501 colleges, along with 3,348 NBA institutions, the total was about 20,000 institutions.
Challenges faced by PM Vidyalaxmi
- Reduced Institution Coverage
- Only institutions ranked in NIRF are eligible, significantly lowering the number of qualifying institutions compared to past schemes.
- Performance Stakes
- With eligibility tied to rankings, students must perform exceptionally well in entrance tests to access loans.
- Exclusion Risks
- Students in non-NIRF ranked institutions face higher interest rates or loan rejection.
- Institutional Competition
- Rankings become crucial, incentivizing institutions to seek higher NIRF standings to attract students benefiting from the scheme.
