Policy Update
Meyhar Kaur Walia
Background:
One of the major responsibilities of the Government is to ensure that no student is denied the right to education and has an equal opportunity to pursue higher studies regardless of their background. The core idea of education in India is the transformation of the country through the path of education. In today’s world, higher education has become an essential component in one’s growth, and it has implications for the poor and disadvantaged sections in India. Almost all countries have various types of scholarships for students, and the eligibility criteria differ across institutions.
In recent years, there has been an increasing realization of the importance of education for social and economic growth, and subsequently, policy attention has been directed towards it. The Department of Higher Education (DHE) has launched various schemes to provide financial assistance to students from economically weaker backgrounds to pursue their higher education, in the form of scholarships, education loans, etc. The higher education policies need to be inclusive, liberal, and accommodating to a more advanced, and knowledge-based society.
Schemes for Financial Assistance:
The following are Financial Assistance schemes in India:
- Pradhan Mantri Uchchatar Shiksha Protsahan Yojana (PM-USP) Central Sector Scheme of Scholarship for College and University Students: This scheme has been in operation since 2008 and provides financial assistance to students, who are above the 80th percentile in class XII or equivalent examination and having family income of less than Rs 4.5 lakh per annum. The rate of scholarship for the first three years is Rs 12,000 per annum and Rs 20,000 per annum for the fourth and fifth years. The annual target is 82,000 scholarships, with 41,000 scholarships, each for boys and girls.
- PM-USP Special Scholarship Scheme for Jammu and Kashmir and Ladakh: It was implemented in 2011, in the context of enhancing employment opportunities in J&K. It provides 5000 scholarships every year. The provision of inter-changeability of slots is provided among medical and engineering streams, depending on the extra seats available due to fewer students choosing general degree courses. Eligible students from Jammu and Kashmir and Ladakh include those whose family income is less than Rs. 8.0 lakh per annum. These students who passed class XII from these two UTs should have secured admission outside these UTs in the institution, either in UGC 12 B-approved or AICTE/recognized institutions. The rate of scholarship towards tuition fees for general courses is Rs 30,000 per annum, Rs 1.25 lakh per annum for engineering courses, and Rs 3.0 lakh per annum for medical courses.
- Interest Subsidy and Contribution for Guarantee Fund: PM-USP Central Sector Interest Subsidy Scheme (CSIS) and The Credit Guarantee Fund Scheme for Education Loans (CGFSEL) are functioning under one head as ‘Interest Subsidy and Contribution for Guarantee Fund’. The CSIS scheme provides full ‘interest subsidy’ for the period of moratorium on educational loans up to Rs 10 lakh without any collateral security. Eligible students include those whose family income is ₹4.5 lakh or less per year. The interest subsidy applies only to professional/technical programmes in NAAC or NBA-accredited institutions, Institutes of National Importance, or Centrally Funded Technical Institutions (CFTIs). Under CGFSEL, the central government guarantees education loans up to Rs 7.5 lakh without any collateral or guarantor.
- PM-Vidyalaxmi Scheme: Any student who gets admission to the top 860 Quality Higher Educational Institutions (QHEIs) will be eligible to obtain a collateral and guarantor-free loan from banks and financial institutions to cover the full amount of tuition costs and other costs related to the course. Furthermore, the scheme will also provide for a 3% interest subvention on loans up to Rs 10 lakh for students with up to Rs 8 lakh annual income annually.
- External Scholarships: The Ministry of Education, Department of Higher Education, manages scholarship/fellowship programs offered by foreign countries under Cultural/Educational Exchange programs. Most of these scholarships support research, master’s, and doctoral studies. Students are required to apply online through the Sakshat Scholarship Application Portal.
- EdCIL Vidyanjali Scholarship Application Form: The Ministry of Education initiated a collaborative program, Vidyanjali, mobilizing corporate participation through Corporate Social Responsibility (CSR) and philanthropic funds. The Vidyanjali Foundation processes applications from Navodaya Vidyalaya students who have completed their higher secondary education and have been admitted to a college or higher education institution to help them get scholarships from the CSR funds received by the Vidyanjali Foundation.
- Higher Education and Skill Development Guarantee Scheme: It is an education loan that provides collateral-free loans up to Rs 10 lakh to students who have passed Class X and XII from Delhi and are pursuing diploma, undergraduate, postgraduate, or recognized skill development courses within India. Here, the Delhi Government acts as a guarantor, so there is no need for students to give any security money.
- Minorities Scholarships: The minority communities in India include Muslim, Christian, Sikh, Buddhist, Jain, and Parsi. The Scholarship for higher education includes: The Merit-cum-Means Based Scholarship: Provides assistance to poor and meritorious students from minority communities to enable them to pursue professional and technical courses. Eligibility is the same as the Post-Matric Scholarship. The Post-Matric Scholarship: Eligibility includes students pursuing studies from class 11 up to Ph.D. level and have secured at least 50% marks in their previous examinations with a family income of less than Rs 2.5 lakh per annum.
Recent Developments:
In line with the National Education Policy (NEP) 2020, the Ministry of Education took several initiatives to enhance the quality of education. The government provides financial support to the state governments under Rashtriya Uchchatar Shiksha Abhiyan (RUSA), now the Pradhan Mantri Uchchatar Shiksha Abhiyan (PMUSHA) scheme, under the components, namely, “Enhancing Quality and Excellence in select State Universities”, “Infrastructure Grants to Universities”, and “Multi-Disciplinary Education and Research Universities (MERU)”.
The University Grants Commission (UGC) provides scholarships under the National Scholarship for Post Graduate Studies (NSPG) scheme to students. It also provides fellowships to pursue a Ph.D in all disciplines, under UGC NET-Junior Research Fellowship and Savitribai Jyoti Rao Phule Single Girl Child Fellowship.
Indian Institutes of Technology (IITs) and National Institutes of Technology (NITs) provide complete tuition fee waivers for SC/ST/PwD undergraduate students. Students from the most economically disadvantaged groups, with a family income of less than Rs 1 lakh per year, receive full remission of the fee, and the other economically disadvantaged students with family income between Rs 1 lakh and Rs 5 lakh per year get 2/3rd fee remission.
The National Workshop on Multi-Disciplinary Education and Research Universities (MERU) under Pradhan Mantri Uchchatar Shiksha Abhiyan (PM-USHA) was held on 30th April 2015 and 1st May 2025. The Union Minister of State for Education and Development of the North Eastern Region announced the allocation of ₹100 crore each to 35 universities for carrying out 44 mandatory activities under the MERU components. PM-USHA has an outlay of ₹12,926.10 crore for the period 2023-24 to 2025-26, according to the National Portal of India.
Challenges faced:
India’s higher education is distinguished by its magnitude, with over 1100 universities and 45,000 colleges, with an estimated 4.33 crore students enrolled, according to the All India Survey of Higher Education Report (AISHE 2021-22). Despite the scale of the Indian higher education system, the gross enrolment ratio (GER) for students between the ages of 18 and 23 is about 28.4 in 2021-22, which is significantly lower than that of industrialized nations.
The percentage of government spending on education has been suggested at 6% of GDP. However, the number still lies at around 4.6% of GDP. The tuition rates also differ a lot, with private institutions having exorbitant amounts compared with public institutions, which creates a gap between the wealthy and the less fortunate.
In India, there is a huge dependency on public funding, but this alone is not enough. The government needs to diversify its funding sources by looking for opportunities in campus-generated income, donations from alumni, private endowments, Corporate Social Responsibility (CSR) funds, etc. Furthermore, the system of student support, like scholarships, educational loans, and campus jobs, needs to be strengthened, as most students rely on their families for their education funding, unlike in many developed countries where the environment of student support systems is well established.
Way Forward:
Financing higher education becomes a major concern when students are planning for their future and the Return on Investment (ROI). Students pursue higher education to improve their employment prospects. The burden of large education loans, with the pressure to secure a job and repay the loan, leads to significant psychological distress among students and their families.
Working in the higher education sector needs to be given attention, with the adoption of Social Impact Bonds (SIBs), which are agreements with the government or the public sector wherein the money obtained through the bonds is invested in projects anticipated to have social results. Microfinancing and crowdfunding are other ways. These methods are indeed in practice in India; however, their application within the higher education sector remains relatively limited. Strengthening higher education will promote greater access and equity within the educational landscape.
References:
- Shri Dharmendra Pradhan launches EdCIL Vidyanjali Scholarship Programme. (n.d.). https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2003271
- Press Information Bureau. (2025, May 2). Pradhan Mantri Uchchatar Shiksha Abhiyan (PM-USHA): Building stronger institutions for a knowledge-driven future. Press Information Bureau. https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=154392&ModuleId=3
- Nic, L. P. (n.d.). Department of Higher Education | Government of India, Ministry of Education. https://www.education.gov.in/scholarships_education_loan
- Press Information Bureau. (2025, March 19). Higher education institutions in the country in STEM. Press Information Bureau. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2114326#:~:text=Government%20of%20India%20also%20provides,Infrastructure%20Grants%20to%20Universities%E2%80%9D%20and
- Sehgal, A. (2022). Exploring challenges and opportunities for higher education funding in India. In Jesus and Mary College, University of Delhi, Int. J. Adv. Multidisc. Res. Stud. (Vols. 2–4, pp. 919–925). https://www.multiresearchjournal.com/admin/uploads/archives/archive-1684173865.pdf
- Saiyed, M. (n.d.). Financial assistance for higher education – A boon or bane? An emerging economy perspective. ResearchGate. https://www.researchgate.net/publication/361084522_Financial_Assistance_for_Higher_Education_-_A_Boon_or_Bane_An_Emerging_Economy_Perspective
- Department of Higher Education, Government of NCT of Delhi. (n.d.). Higher Education and Skill Development Guarantee Scheme for pursuing higher education in Delhi. https://higheredn.delhi.gov.in/higheredn/higher-education-and-skill-development-guarantee-scheme-pursuing-higher-education-delhi
- Ministry of Education, Government of India. (2023). All India Survey on Higher Education (AISHE) 2021–22. https://www.education.gov.in/sites/upload_files/mhrd/files/statistics-new/AISHE%20Book_2021-22_4.pdf
- Ministry of Minority Affairs, Government of India. (n.d.). Scholarship schemes. https://www.minorityaffairs.gov.in/show_content.php?lang=1&level=2&ls_id=661&lid=823
About the Author:
Meyhar Kaur Walia is a Research Intern at IMPRI and is pursuing her undergraduate degree in Political Science from Delhi University.
Acknowledgement:
The author expresses sincere gratitude to all those who provided guidance, with special thanks to Dr Arjun Kumar and Ma’am Aasthaba Jadeja.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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