Credit assignment--how changes in individual neurons and synapses affect a network's output--is central to learning in brains and machines. Noise correlation, which estimates gradients by correlating perturbations of activity with changes in output, provides a biologically plausible solution to credit assignment but scales poorly as accurately estimating the Jacobian requires that the number of perturbations scale with network size. Moreover, isotropic noise conflicts with neurobiological observations that neural activity lies on a low-dimensional manifold. To address these drawbacks, we propose neural manifold noise correlation (NMNC), which performs credit assignment using perturbations restricted to the neural manifold. We show theoretically and empirically that the Jacobian row space aligns with the neural manifold in trained networks, and that manifold dimensionality scales slowly with network size. NMNC substantially improves performance and sample efficiency over vanilla noise correlation in convolutional networks trained on CIFAR-10, ImageNet-scale models, and recurrent networks. NMNC also yields representations more similar to the primate visual system than vanilla noise correlation. These findings offer a mechanistic hypothesis for how biological circuits could support credit assignment, and suggest that biologically inspired constraints may enable, rather than limit, effective learning at scale.