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PM Vidyalaxmi
Context:
The PM Vidyalaxmi Scheme, approved by the Union Cabinet on November 6, 2024, aims to provide financial support to meritorious students seeking higher education.
- While there are several schemes designed to assist students financially, PM Vidyalaxmi stands out due to its unique features and comprehensive approach.
Overview of Scheme:
- Purpose: The scheme aims to ensure that financial constraints do not prevent students from pursuing quality higher education.
- Eligibility: Students who secure admission in any of the 860 Quality Higher Education Institutions (QHEIs) as defined by the National Institutional Ranking Framework (NIRF) are eligible for the scheme.
- This includes both government and private institutions that are ranked within the top 100 in the overall list or in category-specific/domain-specific lists.
Key Components:
- Loan Features: The scheme offers collateral-free and guarantor-free loans from banks and financial institutions to cover the full amount of tuition fees and other related expenses.
- Income Cap: For students with an annual family income of up to ₹8 lakh, a 3% interest subvention on loans up to ₹10 lakh will be provided during the moratorium period.
- Interest Subvention: The interest subvention will be provided to one lakh students every year, with a total outlay of ₹3,600 crore from 2024-25 to 2030-31. This will benefit about seven lakh students over the duration of the scheme.
- Preference: Preference will be given to students from government institutions pursuing technical or professional courses.
Benefits:
- Credit Guarantee: For loans up to ₹7.5 lakh, a 75% credit guarantee is provided to support banks in extending education loans.
- Annual Support: The scheme aims to support 1 lakh students annually with interest subvention.
- Digital Application Process: The scheme is administered through a simple, transparent, and entirely digital application process.
Comparison with Other Schemes
- Eligibility Criteria: Unlike previous schemes that required institutions to be accredited by the National Assessment and Accreditation Council (NAAC) and National Board of Accreditation (NBA), PM Vidyalaxmi focuses on institutions ranked by the NIRF.
- Central Sector Interest Subsidy Scheme (CSIS): While CSIS also provides interest subsidies on education loans, it is limited to students with an annual family income of up to ₹4.5 lakh. PM Vidyalaxmi extends this benefit to families with incomes up to ₹8 lakh, covering a larger segment of the population.
- Credit Guarantee Fund Scheme for Education Loans (CGFSEL): CGFSEL provides a credit guarantee for education loans up to ₹7.5 lakh. PM Vidyalaxmi not only offers a similar credit guarantee but also includes an interest subsidy, making it a more comprehensive support system.
- Income and Caste Considerations: Previous schemes mainly focused on low-income groups, with eligibility often restricted based on caste and income factors. PM Vidyalaxmi extends benefits to students from middle-income families (with an annual income of up to ₹8 lakh).
Implications:
- Focus on NIRF Rankings: The scheme makes the NIRF ranking crucial for loan eligibility, which may limit opportunities for students who don’t gain admission to top-ranked institutions.
- Potential Challenges for Non-Top-Ranked Institutions: Banks might charge higher interest rates for loans to students from lower-ranked institutions or reject loan applications outright if institutions do not perform well in the rankings.
- Increased Competition: As only top-ranking institutions are eligible, students may face greater competition in entrance tests to gain access to these institutions and benefit from the loan scheme.
