PocketEducation Loan EMI Calculator
Estimate payments for college finance. Understand how interest accrues during the study moratorium phase and plan your repayment.
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Monthly EMI
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Accrued Interest in Moratorium
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Education Loan Calculations
Education loans have a moratorium period (course duration + 1 year grace period) during which EMIs are not paid. However, simple interest continues to accumulate on the disbursed principal:
- Moratorium Interest: Principal × rate × moratorium years
- Repayment Principal: Principal + Moratorium Interest
- EMI: Calculated on the repayment principal over the tenure using the reducing balance formula.
Worked Example
If you borrow ₹10,00,000 at 10.5% with a 5-year moratorium and a 7-year repayment:
- Disbursed Principal: ₹10,00,000
- Moratorium Interest Accrued: ₹5,25,000
- Principal at Repayment Start: ₹15,25,000
- Monthly EMI: ₹25,712
- Total Interest Paid: ₹11,84,813 (Moratorium + Repayment Interest)
Frequently Asked Questions
What is the moratorium period in an education loan?
The moratorium period is a holiday period during which the student is not required to pay EMIs. It typically lasts for the course duration plus 6 months to 1 year after finding employment.
Does interest accumulate during the moratorium?
Yes, banks charge simple interest on the disbursed loan amount during the moratorium. Any unpaid interest is capitalized, meaning it is added to the principal to calculate EMIs.
Can I pay interest during the moratorium?
Yes. Paying interest during the study period is recommended as it prevents interest capitalization, keeping your post-college EMIs significantly lower.
Are there tax benefits on education loans?
Yes, under Section 80E of the Income Tax Act, the interest paid on an education loan is fully deductible from your taxable income for up to 8 years. There is no upper limit on this deduction.
Who acts as a co-applicant for education loans?
A parent, guardian, or spouse must act as a co-applicant or guarantor for the loan. Their income profile is evaluated by the bank to secure the credit.