PM-Vidyalaxmi scheme for higher education gets nod

Context: The Union Cabinet chaired by Prime Minister Narendra
Modi on Wednesday approved a new Central Sector scheme, PM Vidyalaxmi, which
seeks to provide financial support to meritorious students in their pursuit of
higher education. Under the scheme, for loans up to ₹7.5 lakh, the student will
receive a credit guarantee of 75%, enabling banks to extend education loans to
students. An outlay of ₹3,600 crore has been made during 2024-25 to 2030-31,
and 7 lakh fresh students are expected to get the benefit.

PM Vidyalaxmi Scheme

·      
About: Under the scheme, a student who secures admission in
any of the top 860 Quality Higher Education Institutions (QHEIs), both
government and private, will be eligible to get collateral-free, guarantor-free
loan from banks and financial institutions to cover full amount of tuition fees
and other expenses related to the course. The scheme will potentially cover 22
lakh students, a Ministry of Education spokesperson said.

·      
Objectives: Facilitating Educational Loans- Basically,
this scheme provides an option for the students to obtain their educational
loans from any one bank through a single window, according to their chosen
course of study.

Financial Inclusion- This scheme also envisions that poor and financially weak students
should be able to pursue higher education.

Transparency- Ease of operation for students and parents during the entire process:
application, sanction, disbursement, and repayment of an educational loan.

Supporting Government Scholarships- A single window for all scholarships offered by the
Government of India for applying and getting the relevant scholarship.

Ease of Use- Providing a single window for multiple financial services for both
education loans and scholarships.

·      
Salient
Features: Integrated Online Platform-
One platform for the applicants to apply to multiple banks for their
educational loan request.

Loan Application Tracking- Tracking of the applications submitted for loans in real time.

Custom made loan options- Various schemes designed for the benefit of students from various
courses and institutions.

Integrated with government scholarship- Details and application forms of the government
scholarships would also be available in the same window.

Educational Loan FAQs- FAQs and educational guides on the loan application process to help the
student.

Compare Loans- Comparison of terms and conditions in respect to the educational loans
of various banks to understand the best available option.

·      
Challenges: Awareness and Outreach- Limited publicity,
more so in rural areas, limits its outreach.

Bank Participation- Variable participation and
responsiveness of various banks.

Processing Delays- The processing and disbursal of loans often gets delayed.

Eligibility Constriction- Stringent eligibility criteria set by some banks may deprive many
deserving students.

Technological Barriers- The accessibility of the online portal is hampered due to
non-connectivity in areas of bad internet connectivity.

Repayment Concerns- The economically weaker sections of the students find various
difficulties during the process of repayment of the loan; hence, a burden on
her/his finance after an education.

·      
Way
Forward: Increased Awareness-
The awareness of the scheme could be built through intense advertisement by the
government and educational institutions, particularly targeting the rural and
relatively backward areas of the country.

Bank Collaboration- Improve the collaboration of the partnered banks and their liability to
ensure that loan processing is done in a time-bound and effective manner.

Simplified Criteria- The eligibility criteria must be revised and simplified for more
students to take advantage of the same.

Technological Enhancements- Enhanced internet and digital infrastructure powering
the portal such that access to these resources is seamlessly uniform across the
country.

Financial Literacy- Financial management and planning education to the students—maybe it
can help them to be more prepared in loan repayment.