Getting an education loan up to ₹10 lakh for a middle-class aspirant would now be easy as the Union Cabinet on Wednesday approved a new Central Sector Scheme.
Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) also decided to enhance the equity capital for Food Corporation of India (FCI) by over ₹10,000 crore.
Announcing these decisions, Information & Broadcasting Minister Ashwini Vaishnaw said the scheme will have total outlay of ₹3,600 crore. “This will cover almost every student (going to pursue higher education) from lower middle income and middle-income family.” Also, the scheme will include all the streams. Adding to this Education Minister Dharmendra Pradhan said: “Education loans under the scheme will be facilitated to students securing admissions in top 860 HEIs (Higher Educational Institutions) of the country based on NIRF. This will cover more than 22 lakh students every year.”
Students having annual family income of up to ₹8 lakh shall be eligible to get 3 per cent interest subvention on education loans up to ₹10 lakh. Loans up to ₹7.5 lakhs shall be eligible for 75 per cent credit guarantee. Education loans will be facilitated through a transparent, student-friendly and digital application process that will be common to all banks. Financial assistance to meritorious students is a key recommendation of NEP 2020. “Collateral-free and guarantor-free education loans under PM Vidyalaxmi will maximise access to higher education for meritorious students and ensure that financial constraints do not prevent students from pursuing education,” Pradhan said.
Unified portal
A government statement said that the Higher Education Department will have a unified portal “PM-Vidyalaxmi” on which students will be able to apply for the education loan as well as interest subvention, through a simplified application process to be used by all banks. “Payment of interest subvention will be made through E-voucher and Central Bank Digital Currency (CBDC) wallets,” it said.
The scheme will supplement the Central Sector Interest Subsidy (CSIS) and Credit Guarantee Fund Scheme for Education Loans (CGFSEL), the two component schemes of PM-USP, being implemented by the Higher Education Department. Under the PM-USP (Pradhan Mantri Uchchatar Shiksha Protsahan) CSIS, students with annual family income up to ₹4.5 lakh and pursuing technical/ professional courses from approved institutions get full interest subvention during moratorium period for education loans up to ₹10 lakh.
FCI Capital Infusion
Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) Narendra Modi, has approved infusion of equity of ₹10,700 crore for working capital in financial year 2024-25 in Food Corporation of India (FCI). “The decision is aimed at bolstering the agricultural sector and ensuring the welfare of farmers nationwide,” a government statement said.
FCI started its journey in 1964 with authorised capital of ₹100 crore and equity of ₹4 crore. The operations of FCI increased manifolds resulting in increase of authorised capital from ₹11,000 crore to ₹21,000 crore in February 2024. The equity of FCI was ₹4,496 crore in the financial year 2019-20 which increased to ₹10,157 crore in the financial year 2023-24.
“FCI resorts to short-term borrowings to match the gap of fund requirement. This infusion will help lower the interest burden and will ultimately reduce the subsidy of government,” the statement added.