PM-Vidyalaxmi: a no-collateral education loan, with the government paying interest while you study

By the author of From Rupees to Riches: Master the Indian Wealth Game. Published 30 October 2026. Scheme details last verified 30 October 2026.

PM-Vidyalaxmi eligibility comes down to two questions: where did you get admission, and what does your family earn? If you got a merit seat at one of about 1,425 listed institutions, you can get an education loan with no collateral and no guarantor. If your family earns up to ₹8 lakh a year, the government also pays 3 percentage points of the interest rate while you study and for a year after. Up to ₹4.5 lakh, on a technical or professional course, it can pay all of the interest for that period.

On a ₹10 lakh loan for a four-year course, that is the difference between repaying about ₹24 lakh and about ₹18.3 lakh over 15 years (the worked example is below). The subsidy is not automatic. You have to opt in on the portal, and the bank has to claim it.

What the PM-Vidyalaxmi scheme is

PM-Vidyalaxmi is a central government scheme run by the Department of Higher Education. The Union Cabinet approved it on 6 November 2024 with an outlay of ₹3,600 crore for 2024-25 to 2030-31. It has three parts:

• Collateral-free loans. Banks lend for tuition and course costs without property or a guarantor.
• A government guarantee. On loans up to ₹7.5 lakh, the government covers 75% of any default. This is why banks agree to lend without security.
• Interest subvention. The government pays 3 percentage points of the interest during the course and one year after it, on loans up to ₹10 lakh.

It sits alongside an older scheme, the Central Sector Interest Subsidy (CSIS), which pays the full interest for families earning up to ₹4.5 lakh. Both are claimed on the same official PM-Vidyalaxmi portal, which Canara Bank runs for the Department of Higher Education.

The scheme is live. A government backgrounder dated 29 July 2026 reports 70,852 PM-Vidyalaxmi loans sanctioned in FY 2025-26, and the portal showed 72,042 active subsidy wallets when we checked on 30 October 2026.

Who can apply: PM Vidyalaxmi scheme eligibility

You qualify for the loan if all of these are true:

• You have admission to a Quality Higher Education Institution (QHEI). That means an institution ranked in the top 100 of the latest NIRF rankings (overall, category or domain), a state or UT government institution ranked in the top 200, or any central government institution. The 29 July 2026 backgrounder puts the list at 1,425 institutions. The portal publishes the current list.
• Your admission is on merit, through an entrance exam or the institution's merit process. Management quota and NRI quota seats do not qualify.
• The course is in India. Foreign universities, foreign campuses of Indian institutions and Indian campuses of foreign universities are excluded.
• You register with Aadhaar.

There is no income limit for the loan itself. Income matters only for the interest subsidy:

One detail is worded inconsistently in official papers. The Cabinet release and the portal say "up to ₹8 lakh". The July 2026 backgrounder says "below ₹8,00,000" in one place and "up to ₹8 lakh" in another. If your family income is exactly ₹8 lakh, confirm with the bank before you rely on the subsidy.

You lose the subsidy if you already get another central or state scholarship, fee reimbursement or interest subsidy. You can use the scheme only once, for one undergraduate, postgraduate or integrated course.

What you get, in rupees

The 3% subvention has a cap of one lakh students a year, with priority for students at government institutions on technical or professional courses. CSIS has no such cap.

Banks cannot charge more than their external benchmark lending rate (EBLR) plus 0.5% on these loans, according to the July 2026 backgrounder. Most EBLRs track the repo rate, so the loan rate moves with the RBI repo rate. Repayment can stretch to 15 years after the moratorium.

Here is what the subsidy is worth. The example assumes a ₹10 lakh loan, paid out as ₹2.5 lakh at the start of each year of a four-year course, an illustrative interest rate of 9%, simple interest during the course and the one-year moratorium, no interest paid during that time, and repayment over 15 years at 9%. Your bank's rate will differ.

So the 3% subvention cuts about ₹1.92 lakh from the total repaid, and full CSIS cuts about ₹5.75 lakh. The EMIs come from the same formula as our home loan prepayment calculator.

There is also a tax benefit. Interest paid on an education loan qualifies for the Section 80E deduction for up to eight years, with no rupee cap, but only if you file under the old tax regime. Our guide to the old vs new tax regime break-even shows when the old regime is worth it.

How to apply on the official portal

Apply only at pmvidyalaxmi.co.in. Sites with similar names on other domains exist. They are not the government portal.

1. Register. Create a student account with your name, email and mobile number, and verify both with OTPs.
2. Authenticate with Aadhaar. Aadhaar is needed for the guarantee and the interest subsidy.
3. Fill in the Common Education Loan Application Form. One form covers personal details, PAN, your 10th and 12th details, the admission quota, the course, the institution, the course cost and the loan you need.
4. Upload documents and choose banks. The same form goes to the banks you select. You do not fill a separate form for each bank.
5. Track the application. The dashboard and SMS alerts show status and any bank queries. The bank sanctions the loan and pays the fees directly to the institution.
6. Claim the interest subsidy. After the loan is sanctioned and disbursed, choose "Apply for Interest Subvention" on the portal and upload your family income certificate. The subsidy is paid into a PM-Vidyalaxmi Digital Rupee wallet and then moved to your loan account.
7. Stay eligible. From the second year, the subsidy continues only if your academic performance is satisfactory and you stay enrolled.

Deadline to watch now: claims for FY 2025-26 under both PM-Vidyalaxmi and CSIS run from 1 September 2026 to 31 December 2026, according to the portal. Your bank submits the claim, but only if you opted for the subsidy on the portal. If your loan was disbursed in 2025-26 and you have not opted in, do it now and tell your branch.

Documents you need

• Student's Aadhaar and PAN.
• Parent or co-applicant's Aadhaar, PAN and income proof.
• Address proof and passport-size photographs.
• Class 10 and 12 marksheets, and the entrance exam result.
• Admission or offer letter, showing the quota, and the fee structure from the institution.
• A family income certificate from a competent authority, for the interest subsidy.

The portal shows the exact list for your application. Banks may ask for more.

Common reasons applications get rejected

• Wrong quota. A management or NRI seat is not covered. Check the quota on your allotment letter before you apply.
• Institution not on the list. The list changes each year with the NIRF rankings. Check this year's list on the portal, not last year's.
• PAN details that do not match. The name and date of birth on PAN must match the form exactly.
• Missing income certificate. Without it, you get the loan but not the subsidy.
• Another scholarship. A state fee reimbursement or post-matric scholarship rules out the subsidy. Compare which is worth more before you choose.
• Not opting in. The bank cannot claim a subsidy you never selected on the portal.
• Dropping out or poor results. Leaving the course, expulsion or unsatisfactory progress from the second year stops the subsidy.

Similar schemes worth comparing

• CSIS (full interest subsidy). For families earning up to ₹4.5 lakh. Applied for on the same portal.
• Skill loans. The credit guarantee scheme for skill development loans has moved from this portal to the JanSamarth portal.
• Saving ahead instead of borrowing. For a daughter under 10, the Sukanya Samriddhi calculator shows what regular deposits grow to by college age. The goal planner works out a monthly saving for any education target.
• Current small savings rates are on our small savings rates page.

Questions people ask

My college is not in the NIRF top 100. Can I still apply? Yes, if it is a state or UT government institution in the top 200, or any central government institution. Search the institution list on the portal.

Does the 3% subsidy last for the whole loan? No. It covers the course period plus one year. After that, you pay the bank's full rate.

Is the loan capped at ₹7.5 lakh? No. The loan can cover full tuition and course costs. The ₹7.5 lakh figure is the limit for the government guarantee, and ₹10 lakh is the limit for the interest subsidy. For larger amounts, ask the bank about its own terms on security before you apply.

My family earns ₹12 lakh. Is the scheme still useful? Yes. You get a collateral-free, guarantor-free loan at a capped rate, even though you get no interest subsidy.

Can I use it to study abroad? No. The portal lists loans for study abroad, but PM-Vidyalaxmi benefits apply only to listed institutions in India.

Never pay an agent to apply. Apply only on the official portal linked above.

For education only. Not investment, tax or legal advice. See our disclaimer.