Education loans usually come with a moratorium: you don't repay while studying and for a few months after. But interest keeps building during that time and is added to the loan, so your EMI can be much higher than you expect. This calculator shows the real cost.
How education loan EMI is calculated
Interest during moratorium = loan × rate × moratorium years (simple interest)If not paid, it's added: amount to repay = loan + moratorium interestEMI = standard EMI formula on the amount to repay, over the repayment periodThe moratorium usually covers the course plus 6–12 months. Some banks compound interest during it; the calculator uses simple interest, which most banks apply.
Worked example
Example: ₹10 lakh at 10%, 2-year moratorium, then 7 years of EMIs
If you pay nothing while studying: ₹2 lakh of interest builds up, the loan becomes ₹12 lakh, EMI ₹19,921, total interest ₹6.73 lakh.
If you pay the interest (₹8,333 a month) while studying: the loan stays at ₹10 lakh, EMI ₹16,601, total interest ₹5.94 lakh.
Paying even part of the interest during the course, through family support or an internship, cuts the EMI you'll face when your first job starts.
Tax benefit and tips
- In the old regime, the full interest you pay on an education loan for yourself, your spouse or children is deductible for up to 8 years. There's no upper limit. It's not available in the new regime.
- Government schemes such as interest subsidies for lower-income families may apply; check with the bank.
- Loans over a certain size need collateral or a co-applicant. Compare banks and NBFCs on rate, margin and processing fees.
How to use this calculator
- Enter the loan amount and rate.
- Enter the moratorium: course length plus the grace period.
- Choose whether you'll pay interest while studying.
FAQs
Should I pay interest during the moratorium?
If you or your family can, it keeps the loan from growing and lowers later EMIs.
Is education loan interest tax-deductible?
In the old regime, the interest (not principal) can be deducted for up to 8 years under Section 80E.
Results are estimates for resident individuals under 60 and aren't tax, legal or financial advice. For your own return, check with a chartered accountant. Spotted a mistake? Tell us.