Education Loans: How the Moratorium Period Affects Your Cost
Education loans are designed around the reality that students don't earn while they study. Most lenders offer a moratorium: a break from EMIs for the length of the course plus a short grace period, often six months to a year, to find a job. Repayment then starts as regular EMIs.
The catch is that interest usually keeps running during the moratorium. This calculator shows how much it adds up to and how it changes your EMI later.
Two ways to handle interest while you study
1. Let it be added to the loan
If you pay nothing during the course, the interest that builds up is added to your balance when repayment begins. You then pay interest on that interest for the rest of the loan, which raises both the EMI and the total cost.
2. Pay the interest as you go
Some families choose to pay just the monthly interest while the student is studying. The balance stays at the original loan amount, so the EMI after graduation is lower and the overall cost falls. Switch the "Interest during study" option above to compare both approaches.
How to read your results
- Interest during study – what accrues across the course and grace period.
- Balance when repayment starts – the amount your EMIs will be based on.
- EMI after course – the monthly payment once the moratorium ends.
- Total interest – interest from both phases combined.
Planning tips for students and parents
- Estimate a realistic starting salary for the course and check that the EMI is manageable on it.
- Ask whether the lender offers an interest concession for paying during the study period.
- Check whether interest on education loans gives any tax benefit in your country.
- Borrow for tuition and essential costs only; every extra amount accrues interest for years.