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PM-Vidya Laxmi Scheme
Context:
The Union Cabinet recently approved the PM-Vidyalaxmi scheme, a financial support initiative for meritorious students across India, which provides monetary support in the form of education loans in both public and private institutions.
Key Features
- Collateral-Free Loans: Students admitted to top-ranking higher educational institutions (HEIs) can avail collateral-free and guarantor-free education loans. The scheme will cover tuition fees and other course-related expenses.
Loan Coverage:
- Up to Rs. 7.5 lakh loan with a 75% credit guarantee by the central government to support banks.
- Students from families with an annual income up to Rs. 8 lakh are eligible for a 3% interest subsidy on loans up to Rs. 10 lakh during the moratorium period. This interest subsidy will support 1 lakh students each year.
- Unified Digital Portal: Applications for loans and interest subventions can be made through a government-run PM-Vidyalaxmi portal, making the process transparent, easy, and fully digital.
Eligible Institutions:
- The scheme applies to top-ranking HEIs based on the National Institutional Ranking Framework (NIRF), covering both government and private institutions:
- Top 100 in overall and category-specific NIRF rankings.
- State-run institutions ranked 101-200 in NIRF.
- All central government-run institutions.
- Initially, 860 institutions qualify, with annual updates to the list based on NIRF rankings.
Financial Outlay and Impact
- Budget Allocation: Rs. 3,600 crore allocated for 2024-25 to 2030-31.
- Student Coverage: Expected to support 22 lakh students annually, with 7 lakh new students benefiting from interest subvention each year.
Additional Benefits
- The scheme supplements existing programs like the Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL). It builds on the goals of the National Education Policy 2020, which emphasises accessible, affordable higher education for deserving students.
The PM-Vidyalaxmi Scheme VS Higher Education Financing Agency (HEFA):
Both serve different purposes within India’s higher education sector, although both aim to support the development and accessibility of quality education. Here’s a comparison to outline their distinct roles:
- Purpose and Focus
- PM-Vidya Laxmi Scheme: Aims to provide collateral-free education loans and interest subvention to meritorious students from economically weaker backgrounds, helping them pursue higher education without financial barriers.
- HEFA (Higher Education Financing Agency): Primarily focuses on financing infrastructure and research projects in higher educational institutions, especially public universities and institutes. It provides low-cost loans to institutions for development projects rather than offering direct financial aid to students.
Beneficiaries
- PM-Vidya Laxmi Scheme: Directly benefits students, covering tuition fees and related expenses.
- HEFA: Benefits institutions rather than individual students. HEFA funds are used by educational institutions to improve facilities, infrastructure, and resources that enhance the overall quality of education and research capacities.
Funding and Loan Structure
- PM-Vidya Laxmi Scheme: Provides collateral-free loans up to Rs. 7.5 lakh with a 75% credit guarantee by the government. For students with family incomes up to Rs. 8 lakh, it offers a 3% interest subsidy on loans up to Rs. 10 lakh during the moratorium period.
- HEFA: Offers low-interest loans to institutions with no interest subsidy or credit guarantee for individual students. The repayment responsibility lies with the institution, typically covered by revenue generated from their internal resources.
Scope of Coverage
- PM-Vidya Laxmi Scheme: Focuses on student financial aid for attending both public and private institutions, including technical and professional courses.
- HEFA: Primarily supports infrastructure projects in government-funded and aided institutions. This includes central universities, IITs, IIMs, and other high-ranking public institutions, expanding their research capabilities and physical infrastructure.
Implementation Mechanism
- PM-Vidya Laxmi Scheme: Operates through a unified digital portal, where students can apply for loans and interest subventions. The application process is student-centric and streamlined for ease of access.
- HEFA: Operates as a non-banking financial company (NBFC), in partnership with institutions, where they apply for funding for infrastructure projects. HEFA is co-promoted by the Ministry of Education and Canara Bank, with other PSBs providing loans.
Summary
- PM-Vidyalaxmi is a student-centred scheme providing loans for individual educational needs, making higher education more accessible for students from low-income families.
- HEFA, in contrast, is an institution-centred agency that finances infrastructure projects for public institutions, improving the quality and capabilities of these institutions over the long term.
- Both contribute to the educational ecosystem by addressing different needs — PM-Vidyalaxmi for student financing and HEFA for institutional development.
