Despite a strong desire to pursue higher education, many students in the country are unable to do so due to the financial constraints of their families. Although various banks offer educational loans, the conditions put forward by the banks often become an obstacle for students from poor families. In this context, the union government has introduced the 'PM Vidya Lakshmi' scheme to support the higher education of children from low-income and middle-class families. The union cabinet gave approval to this two days ago. In the first phase, students securing admission to 860 top educational institutes in the country will get the benefit of the 'Vidya Lakshmi' loan scheme. The highlight of the scheme is that students who score high marks in Plus Two exams and secure admission to various courses can apply for educational loans online. Students will be able to submit their applications and secure loans through a single portal.

Another distinctive feature of the 'Vidya Lakshmi' loan scheme is its collateral-free and guarantor-free loan facility. At present, education loans up to Rs 4 lakh do not require collateral or a guarantor. However, many banks insist on collateral and guarantee from the parent. It is said that the 'Vidya Lakshmi' scheme offers loans up to Rs 7.5 lakh without collateral or guarantee. For loan amounts up to Rs 7.5 lakhs, a 75% credit guarantee will be provided by the union government. In case of discontinuation of study or default in repayment after the loan, the central government will pay the outstanding amount. The government will earmark Rs 3600 crore for this till 2031. 1 lakh out of 22 lakh students who get admission for higher education will be given three percent interest concession. Priority will also be given to those who get admission in institutions with national educational rankings.

Currently, out of the 860 institutions fixed for this, 657 are government sector institutions. After completing the simple procedure of providing personal details and marks scored in the eligibility test, students can select their desired banks themselves. Due to varying interest rates, students can choose banks offering lower interest rates. The scheme benefits children pursuing foreign education with loans up to Rs 30 lakh. Central regulation is necessary to prevent banks from altering simple education loan norms later. When banks first launched the education loan scheme, they stated that loans up to Rs 4 lakh would not require any collateral or guarantees. However, over time, they introduced stricter requirements for educational loans. Many people even committed suicide after being denied loans.

While vehicle loan interest rates range from 8-9%, most banks charge even higher interest rates for education loans. Strict collateral conditions are also in place for availing larger loan amounts. As 'Vidya Lakshmi' comes under the direct control of the Centre, we can hope that it will be run in a helpful manner to the students. Due to financial constraints, a large number of talented students from ordinary families struggle to pursue higher education even after securing admissions. The 'Vidya Lakshmi' scheme will hopefully provide crucial support not only to them but to all brilliant students.