Education Loan EMI Calculator

An education loan is the one loan where the EMI is not an EMI on what you borrowed. Repayment does not begin when the money does: there is a moratorium covering the rest of your course plus a grace period, and during it no instalment is due. What is not suspended is the interest. It accrues the whole time, and unless somebody pays it as it arises the bank adds it to the loan — so the instalment that eventually starts is worked out on a larger figure than you were sanctioned. Most calculators ignore this and run a plain EMI on the sanctioned amount, which understates the real instalment badly. This one counts it.

How to use it

1. Enter the loan amount and the rate your bank quoted.
2. Enter the study still left to fund and the grace period after it. Together these are the moratorium.
3. Say how the money is released. Semester by semester is the usual arrangement, and it accrues considerably less interest than a single upfront release.
4. Tick the interest option if you or your family can pay the interest while you study — the page shows what that saves.
5. Set the repayment tenure. It is counted from when repayment starts, not from today.

Examples

• 15 lakh at 10.5%, four years of course left plus six months' grace: 32,594 a month once repayment starts — not the 25,291 a plain EMI would suggest
• Servicing the interest during study on that same loan costs about 8,021 a month while studying and saves roughly 1.8 lakh overall

Frequently asked questions

When does repayment on an education loan actually start?

After the moratorium, which is the remaining course duration plus a grace period — commonly six months, sometimes a year, and occasionally set from when you find a job. Nothing is due before that. What people miss is that this is a deferral of the instalment, not of the cost: the clock on interest starts with the first disbursement, not with the first EMI. Check your sanction letter for the exact grace period, because it varies by bank and by scheme and it changes the arithmetic here noticeably.

What is a moratorium, and does interest build during it?

The moratorium is the stretch before repayment begins. Interest does build during it — this is the single most misunderstood thing about education loans. Most Indian banks charge simple interest through the moratorium rather than compounding it, and then capitalise the accumulated amount into the principal when repayment starts. On a 15 lakh loan at 10.5% with four years of course left, that is roughly 4.3 lakh added before you pay your first rupee, which is why the instalment comes out around 32,600 rather than the 25,300 a plain EMI on 15 lakh would give.

Should I pay the interest while still studying?

If it is affordable, almost always yes, and this page shows what it is worth in your case. Paying the interest as it arises stops it being added to the principal, so the eventual instalment is calculated on what you actually borrowed. On the example above it costs about 8,000 a month during study and saves about 1.8 lakh across the loan. Many banks also give a rate concession of around half a percent to a full percent for servicing interest during the moratorium, which is not modelled here and makes the case stronger still. Ask your bank whether yours does.

Is education loan interest tax-deductible?

Interest paid on an education loan for higher studies has been deductible under Section 80E, with no upper limit on the amount, for up to eight years from when repayment begins. Only the interest qualifies — the principal does not, unlike a home loan. The deduction is available to the person repaying the loan, which is often a parent rather than the student. Tax rules change, so confirm the current position before relying on it for a decision, and note that nothing on this page adjusts for the deduction: the figures shown are what leaves your account.

How much education loan is too much for a given salary?

A useful rule of thumb is that the EMI should not exceed about a fifth of your expected take-home pay in the first job, and that the whole loan should sit near or below your realistic first-year salary. The trap is that the loan is taken years before that salary exists, against an estimate that is usually optimistic. Work the number backwards instead: take the instalment this page gives you, decide what monthly figure you could actually service on a starting salary in your field, and let that set the borrowing limit rather than the fee schedule.