Is interest charged during the moratorium period?

Yes. Banks charge simple interest on the disbursed loan amount during the moratorium period. If you do not pay this interest during your studies, it is added to the principal amount when the repayment period begins, increasing your eventual EMI.

Can I pay interest during my studies to lower my future EMI?

Yes. Most banks encourage borrowers to pay the simple interest during the moratorium period. Doing so prevents the interest from being capitalized (added to the principal), significantly reducing your EMI and total interest burden once the repayment phase starts.

What is the Section 80E tax deduction?

Under Section 80E of the Income Tax Act, the entire interest portion of your education loan EMI is tax-deductible. There is no upper limit on the deduction amount. This benefit is available for up to 8 consecutive years starting from the year you begin repaying the loan.

Can parents claim the Section 80E tax benefit?

Yes. Section 80E benefits can be claimed by the individual who is repaying the loan out of their taxable income. If a parent is repaying the education loan for their child, the parent can claim the tax deduction.

What is the maximum tenure for an education loan?

Most Indian banks, including SBI, offer repayment tenures of up to 15 years after the moratorium period ends. A longer tenure reduces your monthly EMI but increases the total interest paid over the life of the loan.

Is collateral required for an education loan?

As per RBI and IBA guidelines, education loans up to Rs. 4 Lakh do not require any collateral or third-party guarantee. Loans between Rs. 4 Lakh and Rs. 7.5 Lakh require a third-party guarantee, and loans above Rs. 7.5 Lakh require tangible collateral security.

Are education loan interest rates floating or fixed?

Most education loans in India are offered at floating interest rates linked to the bank's External Benchmark Lending Rate (EBLR) or Repo-Linked Lending Rate (RLLR). This means your EMI or loan tenure may change if the RBI changes its repo rate.

What is the CSIS scheme for education loans?

The Central Scheme to Provide Interest Subsidy (CSIS) is a government scheme that provides full interest subsidy during the moratorium period for students belonging to Economically Weaker Sections (EWS) with an annual parental income of up to Rs. 4.5 Lakh.

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Education Loan EMI Calculator: Study Loan Repayment | Fermor

What is an Education Loan EMI?

An Education Loan EMI (Equated Monthly Instalment) is the fixed monthly payment made to a lender to repay a study loan, consisting of both principal and interest components.

Unlike other retail loans (such as home or auto loans) where EMIs begin the month following the loan disbursement, education loans are unique. Because the borrower is a student who usually lacks an income source during their studies, the loan repayment is deferred.

Calculating your future EMI before you take the loan is critical because it gives you a realistic target for the salary you will need to earn upon graduation to service the debt comfortably without defaulting.

How the Moratorium Period Works

The moratorium period (also known as a repayment holiday) is the time during which you are not required to pay EMIs. In India, RBI guidelines mandate that banks offer a moratorium period that covers the entire duration of your course plus an additional 6 to 12 months.

During this period, the bank charges simple interest on the loan amount disbursed. If you choose not to pay this interest during your studies, the accumulated interest is added to the principal amount (capitalized) at the end of the moratorium period. Your EMI is then calculated based on this new, higher principal amount.

Tax Benefits Under Section 80E

The Government of India provides a significant tax incentive for higher education through Section 80E of the Income Tax Act. The entire interest portion of your education loan EMI is allowed as a deduction from your taxable income.

Unlike Section 80C, which has a cap of Rs. 1.5 Lakh, there is no maximum limit on the deduction under Section 80E. This benefit is available for a maximum of 8 consecutive years starting from the year in which you start repaying the loan. It can be claimed by the individual who is repaying the loan (the student or their parent).

The Formula Used for Education Loan EMI

Once the repayment period begins, banks use the standard reducing balance formula to calculate the equated monthly instalment:

EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]

Variables in the EMI calculation formula
Variable	Meaning
P	Principal amount (Original loan amount + any unpaid interest from the moratorium)
R	Monthly interest rate (Annual interest rate divided by 12, divided by 100)
N	Repayment tenure in months

If your final principal amount at the end of the moratorium is Rs. 10 Lakh, the interest rate is 9.5% per annum, and the repayment tenure is 7 years (84 months), the EMI will be Rs. 16,344. You will pay a total of Rs. 3,72,896 in interest over the 7 years.

SBI Education Loan and Other Banks

The State Bank of India (SBI) is the largest provider of education loans in India. Their interest rates are typically linked to the External Benchmark Lending Rate (EBLR). SBI offers a concession of 0.50% for female students and an additional concession for students purchasing the SBI Rinn Raksha life insurance policy.

When using this calculator to estimate an SBI Education Loan EMI, set the interest rate slider to the current effective rate quoted by the bank. Note that because these loans are floating-rate loans, the EMI or the loan tenure may change during the repayment period if the RBI changes the repo rate.

How to Use This Calculator

Enter the Loan Amount: Input the total amount you are borrowing (or the estimated final principal amount after the moratorium period if interest is capitalized).
Set the Interest Rate: Enter the annual interest rate quoted by your bank.
Select the Repayment Tenure: Choose the number of years over which you plan to repay the loan once the EMIs start (typically 5 to 15 years).
View the Repayment Schedule: The calculator instantly displays the monthly EMI, total interest, and a detailed month-by-month amortization schedule.

Frequently Asked Questions

In India, education loan repayment generally starts after a "moratorium period." This period typically covers the duration of your course plus an additional 6 to 12 months, giving you time to find a job before EMIs begin.

Disclaimer: All calculations on this page are indicative only. The EMI calculated assumes a fixed interest rate throughout the tenure and does not account for interest capitalized during the moratorium period unless explicitly added to the principal amount. Education loans in India are typically floating-rate loans, meaning the actual EMI may change with changes in the RBI repo rate. This calculator is for educational and planning purposes only and does not constitute financial advice.