Education Loan Moratorium Cost Calculator
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Runs entirely in your browser — your numbers never leave this page.
How it works
The moratorium feels like a pause button — it is not. Interest accrues every month of your course plus the grace period, and if you do not service it, it capitalises: your ₹20 lakh loan becomes ~₹30 lakh before the first EMI, and you pay interest on that inflated principal for a decade.
The cheapest move is paying interest-only during the course (~₹17,500/month on ₹20L at 10.5%). It does not reduce principal, but it stops the compounding snowball — saving ₹8–12 lakh over the loan's life.
Silver lining: once repayment starts, the full interest is deductible under 80E for 8 years with no cap — one of the most generous deductions in the tax code.
Frequently asked questions
What is the moratorium period?
Course duration plus 6–12 months grace after it (or 6 months after getting a job, whichever is earlier). No EMI is due, but interest accrues unless you choose to pay it.
Should I pay interest during the moratorium?
If the family can afford it, absolutely. On ₹20L at 10.5% over a 4.5-year moratorium, unpaid interest capitalises to ~₹10L extra principal — costing far more over the repayment tenure.
Can I get a longer repayment tenure?
Up to 15 years for most education loans. Longer tenure = lower EMI but much more total interest. Match tenure to expected starting salary — EMI should stay under 30–35% of in-hand pay.
Is education loan interest tax-deductible?
Yes — 80E allows full deduction of interest paid for 8 years from the start of repayment, with no upper cap. Only interest, not principal. Available under the old regime.
What if I cannot pay after the course?
Talk to the bank before defaulting — restructuring, tenure extension, or a further short moratorium are possible. Defaulting as a young graduate damages your CIBIL for years.
Do I need collateral?
Loans up to ₹7.5L typically need none; above that, banks ask for collateral or a co-borrower. Government interest-subsidy schemes (CSIS) exist for economically weaker sections.
Simple vs compound during moratorium?
Most banks compound monthly during the moratorium (some charge simple). Monthly compounding on ₹20L at 10.5% for 54 months adds ~₹10.2L vs ~₹9.45L simple — ask your bank which applies.
Can parents claim the 80E deduction?
Whoever actually pays the interest claims it — parent or student. If the parent pays EMIs from their account, the parent claims. Plan this deliberately.
What about studying abroad?
Same mechanics, bigger numbers — and currency risk on top if earnings will be in rupees. Factor a 3–5% annual rupee depreciation into your repayment planning.
Is prepaying an education loan smart?
Usually yes once you are earning — the rate (10–12%) exceeds safe investment returns, and 80E only shelters interest for 8 years. But keep an emergency fund first.