Education Loan Calculator: Interest Rates & Repayment Guide
The Moratorium Period Is a Trap If You Don’t Understand Interest Accrual
Education loans come with a moratorium (grace period) — you don’t pay EMIs during the course + 6–12 months after. But interest accrues during this entire period and gets capitalised (added to your principal). A ₹20L loan at 10% with a 4-year moratorium can become ₹29+ lakh by the time repayment starts.
Current Education Loan Rates (2026)
| Lender | Domestic Course | Study Abroad | Collateral Required? |
|---|---|---|---|
| SBI | 8.5–9.85% | 9–10.5% | Above ₹7.5L |
| HDFC Credila | 9–11% | 9.5–12% | Above ₹20L typically |
| Avanse / InCred | 10.5–14% | 11–15% | Flexible (co-signer required) |
| Government schemes | 4–8% | N/A | No (for eligible categories) |
Interest During Moratorium: The Real Cost
Example: ₹20L loan at 10% for a 4-year MBA program with 1-year post-course moratorium:
- Simple interest during moratorium (5 years): ₹20L × 10% × 5 = ₹10,00,000
- Outstanding at repayment start: ₹30,00,000
- EMI on ₹30L at 10% for 7 years: ₹49,796/month
- If you had paid interest during moratorium: EMI on ₹20L = ₹33,197/month — ₹16,599/month less
Pay at least the interest during the moratorium if you can afford it. Even partial interest payments during study significantly reduce the eventual EMI burden.
Section 80E Tax Benefit
The entire interest component of education loan EMIs is deductible under Section 80E — no upper limit. This deduction is available for 8 years from the start of repayment, or until the loan is fully repaid, whichever is earlier. Key points:
- Only the interest portion is deductible, not the principal
- Available only to the individual (not parent’s tax return) who has taken the loan
- Loan must be from a recognised financial institution (not from relatives or friends)
- Available in both old and new tax regimes? No — old regime only
Repayment Strategies
- Start paying interest during moratorium — prevents capitalisation
- Use salary increments to prepay: Education loans typically have no prepayment penalty
- Consider partial foreign currency repayment: If working abroad, paying in foreign currency can save on forex conversion losses
- Don’t stretch tenure beyond 10 years: The interest accumulation on education loans is steep
Model your repayment scenarios with the education loan calculator. If you’re deciding whether to take a loan or self-fund, compare the cost of borrowing against the opportunity cost of using savings.