A study loan works differently from other loans. You do not start repaying when you get the money. You start after your course ends, plus a gap of six months to a year. That gap is called the moratorium.
Here is the part people miss. Your payments are paused. The interest is not. It builds up from the day the first amount is paid out. If nobody clears it, the bank adds it to your loan. So when payments finally start, they are worked out on a bigger loan than the one you took.
The payment is delayed. The cost is not.
What the difference looks like
Say you borrow 1,500,000 at 10.5%. You have four years of study left, then six months before payments start, and you repay over seven years. The amounts below work the same way in any currency.
| Plain EMI | Counting the pause | |
|---|---|---|
| Monthly payment | 25,291 | 32,594 |
| Total you repay | 2,120,000 | 2,740,000 |
That is 7,303 more every month, for seven years. Nothing about your course changed. Only the arithmetic did.
Why the money comes in parts
Banks rarely hand over the whole loan at once. They release it each term, as fees fall due. This is good for you: money that has not been paid out yet earns no interest.
It also means a calculator that assumes you got everything on day one is wrong. Over a four-year course, the interest that builds up is 433,000 if the money comes in eight parts. It is 709,000 if it all arrives at the start. That is a 64% gap, and it is why the timing matters.
What you can do about it
Pay the interest while you study, if you can. You do not have to, but it stops the interest joining your loan. On the loan above, that is about 8,021 a month during the course. It saves roughly 180,000 over the life of the loan.
Even paying part of it helps. Ask your bank what the monthly interest is right now, and pay what you can afford.