The PM Vidyalaxmi scheme is a central government programme that allows students admitted to selected higher education institutions in India to take an education loan from a bank without pledging collateral or finding a guarantor. It pairs a government credit guarantee for lenders with an interest subsidy for students, through a single online application platform. This guide sets out how the scheme works as of November 2026, using the Ministry of Education’s own figures, and what it means for institutions and lenders.
What the PM Vidyalaxmi scheme is
The Union Cabinet approved the scheme on 6 November 2024. The Cabinet decision said it “seeks to provide financial support to meritorious students”. The Press Information Bureau release of the same day set the outlay at ₹3,600 crore for 2024/25 to 2030/31 and said about 7 lakh fresh students were expected to receive interest subvention over that period.
The scheme sits alongside two older central schemes for education loans: the Central Sector Interest Subsidy scheme and the Credit Guarantee Fund Scheme for Education Loans, which together form the PM-USP umbrella. The 2024 release described PM Vidyalaxmi as supplementing both. The PM Vidyalaxmi scheme extends interest support to a higher family income band, while the older interest subsidy continues for the lowest band.
Which institutions qualify
Only students admitted to a designated quality higher education institution, or QHEI, can use the PM Vidyalaxmi scheme. The list is drawn from the National Institutional Ranking Framework (NIRF), which the Ministry of Education publishes across overall, category and subject rankings. According to a PIB backgrounder dated 29 July 2026, the criteria are:
| Criterion | Institutions covered |
|---|---|
| NIRF top 100 | Institutions ranked in the top 100 in the overall, category-specific or domain-specific NIRF lists, public or private |
| State and union territory institutions | Top 200 ranked institutions under state or union territory governments |
| Central government institutions | All remaining higher education institutions under the Government of India |
The scheme started with 860 institutions in November 2024. The July 2026 backgrounder says 1,425 institutions are now covered, and that the list “is updated using the latest NIRF ranking”. Every central institution qualifies under the third test, so an institute such as IIT Hyderabad is covered regardless of rank. When the PM Vidyalaxmi scheme was approved, the government estimated that the 860 institutions on the first list had more than 22 lakh students who could use it if they chose to.
Some admissions and institutions are excluded. The backgrounder states that management quota and NRI quota admissions “will not get this benefit”. Indian campuses of foreign institutions, foreign campuses of Indian institutions and foreign institutions are outside the scheme, so overseas study continues to be financed through other lenders, including specialist providers such as Prodigy Finance.
The collateral free education loan: terms
The core benefit is a collateral free education loan with no third-party guarantee. The July 2026 backgrounder says there is “no cut-off on highest amount of education loan”. The amount depends on course fees and associated costs, which it lists as mess and hostel fees, refundable and non-refundable institutional fees, a reasonable quality laptop and reasonable living expenses during the course. Students from all income groups can apply for the loan itself.
Pricing is capped. Interest under the scheme is limited to each bank’s Externally Benchmarked Lending Rate (EBLR) plus 0.5%, and the ministry says the rate “will always be less than” the rate the same bank charges on education loans outside the scheme. Banks may give up to 1% further concession if interest is paid during study and the moratorium.
Repayment runs for up to 15 years after a moratorium equal to the course period plus one year. Each collateral free education loan is made by Scheduled Banks, Regional Rural Banks or Cooperative Banks taking part in the scheme. The backgrounder adds that the loan is available for all degree and diploma programmes in India, with no limit on the number of students who can borrow.
Credit guarantee under the PM Vidyalaxmi scheme
The guarantee is the scheme’s main support for banks lending without security. For loans up to ₹7.5 lakh, the Government of India provides a 75% credit guarantee against outstanding default, according to the November 2024 release. The July 2026 backgrounder describes this as a measure that “significantly reduces lender risk”.
For a lender, the PM Vidyalaxmi scheme therefore changes the risk on smaller loans to students at listed institutions. Loans above ₹7.5 lakh can still be made without collateral under the scheme, but the guarantee covers only loans up to that limit. Both the guarantee and the interest subvention can be claimed only once per student, for an undergraduate, postgraduate or integrated course.
The guarantee sits with the government rather than the institution. The official documents describe no financial role for the institution under the PM Vidyalaxmi scheme beyond appearing on the list and admitting the student on merit.
Interest subvention under the PM Vidyalaxmi scheme
The second benefit is a subsidy on interest during the moratorium. Under the PM Vidyalaxmi scheme, students whose family income is less than ₹8 lakh a year receive 3% interest subvention during the moratorium on loans up to ₹10 lakh. Where a loan is larger, the subvention applies only to the first ₹10 lakh of principal. A maximum of one lakh students a year can receive this subvention.
Students from families earning up to ₹4.5 lakh a year in technical or professional courses at approved institutions remain eligible for full interest subvention under the older Central Sector Interest Subsidy scheme. The backgrounder compares the two:
| Feature | PM-USP CSIS | PM Vidyalaxmi |
|---|---|---|
| Family income limit | ₹4.5 lakh | ₹8 lakh |
| Courses | Professional and technical | All degree and diploma courses |
| Subvention during moratorium | Full interest | 3% interest |
| Loan amount covered | Up to ₹10 lakh | Up to ₹10 lakh |
| Annual slots | No limit | 1 lakh fresh slots |
There are conditions. A student receiving any other central or state scholarship, interest subvention or fee reimbursement cannot claim subvention under either scheme. The student must not leave the course or be expelled, and from the second year must maintain satisfactory academic performance to keep receiving the benefit.
How the Vidyalaxmi portal works
All applications go through the PM Vidyalaxmi portal run by the Department of Higher Education. The 2024 release said banks would use a simplified, common application through this unified platform. The July 2026 backgrounder lists what the Vidyalaxmi portal handles: common loan applications, choice of bank, tracking of application status, interest subvention requests and grievances.
The Vidyalaxmi portal is not limited to the scheme. The backgrounder says students can apply to banks for “all kinds of education loans including PM-Vidyalaxmi loans” through it. In 2025/26 the portal received 645,514 education loan applications across all schemes, of which 110,667 were for loans under the scheme.
Subsidies are paid digitally. Once a loan is sanctioned and disbursed, an eligible student applies for subvention, and the amount is credited to a PM Vidyalaxmi Digital Rupee App, a central bank digital currency wallet, before being passed to the loan account. The older interest subsidy scheme now runs through the same portal and wallet: as of 22 July 2026 there were 35,777 active wallets, through which subsidies worth ₹57.66 crore had been disbursed.
The PM Vidyalaxmi scheme in numbers
The ministry has published uptake figures in parliamentary answers and in the July 2026 backgrounder. They cover slightly different periods, so they are shown separately.
- 25 February 2025 to 2 March 2026: 109,139 applications, 68,537 loans sanctioned, 8,799 rejected and 61,436 disbursed, according to the annexure to Lok Sabha unstarred question 2749, answered on 9 March 2026.
- 25 February 2025 to 18 March 2026: 70,169 loans sanctioned worth ₹9,348.49 crore and 62,895 loans disbursed worth ₹2,137.46 crore, according to the annexure to Rajya Sabha unstarred question 3714, dated 25 March 2026.
- Financial year 2025/26: 110,667 applications, 70,852 loans sanctioned and 67,728 disbursed, according to the July 2026 backgrounder.
The Lok Sabha annexure lists 51 banks. State Bank of India handled the largest share, with 57,279 applications received and 36,508 sanctioned, followed by Canara Bank with 13,733 received and 9,574 sanctioned.
By student home state, Uttar Pradesh recorded the most applications under the PM Vidyalaxmi scheme in that period, with 14,344 received and 8,496 sanctioned. It was followed by Tamil Nadu with 12,004 applications, Maharashtra with 9,505, Andhra Pradesh with 8,486 and Bihar with 6,773. Of the 109,139 applications in the Lok Sabha data, 27,105 were recorded as closed, withdrawn or pending with the student, and 4,698 were still being processed by banks.
The Rajya Sabha figures show disbursed amounts well below sanctioned amounts; the annexure does not explain the difference. Private lenders and non-bank finance companies operate in the same market outside the scheme; The Education Daily has reported on deals such as PhysicsWallah’s lending arm selling a loan book to Auxilo.
What the PM Vidyalaxmi scheme means for institutions
For a college or university, inclusion on the QHEI list under the PM Vidyalaxmi scheme matters for admissions. A listed institution can tell admitted students that a collateral free education loan is available through banks under the scheme, with a government guarantee behind it. Because the list follows NIRF results, an institution’s eligibility can change when rankings are revised, except for central government institutions, which are covered in full.
The ministry’s figures show lending under the PM Vidyalaxmi scheme led by a handful of large banks, with State Bank of India accounting for more than half of applications in the Lok Sabha data. The July 2026 backgrounder also notes that interest on these loans attracts income tax benefits. The July 2026 backgrounder describes the same guarantee and subvention terms as the 2024 approval, with a longer list of institutions.
For banks, the PM Vidyalaxmi scheme sets the price ceiling and the eligible institutions, while credit decisions remain with the lender: the Lok Sabha data record 8,799 rejected applications. For the government, the cost is bounded by the ₹3,600 crore allocation and the cap of one lakh fresh subvention slots a year, both fixed until 2030/31.
