PM Vidyalakshmi Scheme 2026: Collateral-Free Education Loans

For many meritorious students, the dream of higher education remains unfulfilled due to financial limits. To overcome this difficulty, the Central Government has launched the PM Vidyalaxmi scheme. Under this plan, students who secure admission to recognised higher education institutions based on merit can avail themselves of education loans without the need for collateral or a guarantor.

Furthermore, a special interest subsidy has been introduced for students from families within specific income brackets, ensuring that no deserving student is left behind in their studies due to a lack of funds.

The PM Vidyalaxmi Scheme is a central scheme of the Ministry of Education, approved by the Union Cabinet on November 6, 2024.

The primary objective of this scheme is to provide education loans—without the need for collateral or third-party guarantees—to students who secure admission based on merit into the country's recognised Quality Higher Educational Institutions (QHEIs). Additionally, financial assistance on loan interest is provided to students from families with specific income levels.

All approved degree and diploma courses, including Undergraduate (UG), Postgraduate (PG), Integrated, and Diploma programs conducted at eligible educational institutions, are covered under this scheme.

One of the key features of the PM Vidyalakhshmi scheme is that no collateral or third-party guarantor is required; furthermore, the loan can cover tuition fees, hostel expenses, mess charges, other educational costs, and even the cost of purchasing a quality laptop.

Additionally, the government provides a 75% credit guarantee for loans up to ₹7.5 lakh, which supports banks in extending credit more smoothly.

Under this scheme, students will receive special interest-related benefits upon meeting specific criteria. Students with an annual family income of ₹8 lakh or less will be eligible for a 3% interest subsidy on education loans of up to ₹10 lakh during the moratorium period.

Additionally, participating banks cannot charge an interest rate exceeding EBLR + 0.5%. Some banks may also offer an additional 1% interest compromise if the interest is paid during the course of study.

A long repayment period has been provided for this scheme. After the course is completed and the one-year moratorium period ends, a maximum of 15 years will be available for loan repayment.

A single digital portal has been launched for the PM Vidyalaxmi scheme. Through this portal, students can access all services online, including applying for education loans, selecting banks, tracking applications, applying for interest subsidies, and lodging grievances.

Interest subsidies for eligible students are credited directly to their education loan accounts via the PM Vidyalaxmi Digital Rupee App (CBDC Wallet).

According to government data, 6,45,514 education loan applications were submitted on the portal during the 2025–26 financial year. Of these, 1,10,667 applications fall under the PM Vidyalakhshmi scheme. A total of 70,852 loans have been sanctioned, and 67,728 loans have already been disbursed. Additionally, interest subsidies amounting to ₹57.66 crore were disbursed via 35,777 active CBDC wallets up to July 22, 2026.

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