Most calculators skip the moratorium period entirely. This one models it properly — showing you the real difference between paying interest during your studies versus letting it pile onto your principal, plus your estimated Section 80E tax savings.
Unlike a home or car loan, an education loan gives you a moratorium period — typically your course duration plus 6–12 months — where you don't pay EMIs. But the loan isn't free during this time: simple interest accrues on the disbursed amount every year you're studying. What you do with that accruing interest changes your total cost dramatically:
| Approach | What happens | Result |
|---|---|---|
| Pay simple interest during study | You pay the accruing interest as it's billed, each year | EMI calculated on original principal only — lowest total cost |
| Let interest capitalise | Accrued interest is added to principal at moratorium end | EMI calculated on a higher principal — you pay interest on interest |
Public sector banks consistently offer the lowest rates, especially for students at premier institutes. Rates below are indicative — always confirm the current rate with the lender before applying.
| Lender / Scheme | Indicative Rate | Max Amount | Collateral |
|---|---|---|---|
| SBI Scholar Loan (IIT/IIM/NIT) | 8.15% | ₹40L | No collateral (premier institutes) |
| SBI Student Loan (domestic, general) | ~8.15–10.15% | ₹10L–30L | No collateral up to ₹7.5L |
| SBI Global Ed-Vantage (abroad) | ~10.25–10.90% | Up to ₹1.5Cr | Collateral above ₹7.5L |
| Bank of India Star Education Loan | ~8.40% | Up to ₹1.5Cr | No collateral up to ₹7.5L |
| HDFC Credila / Avanse (NBFC) | ~11–13% | Up to ₹1.25Cr | Faster approval, no collateral for top global univs |
The moratorium is a repayment holiday — typically your course duration plus 6 to 12 months after graduation — during which you don't have to pay EMIs. However, interest still accrues on the disbursed amount as simple interest. Most domestic loans give course + 1 year; SBI's abroad schemes (like Global Ed-Vantage) give course + 6 months.
Yes, if you can afford it. Paying the simple interest as it accrues (instead of letting it accumulate) prevents that interest from being added to your principal later — which would mean paying interest on interest for the rest of the loan. On a typical loan this can save several lakh rupees in total repayment, as this calculator shows.
The accrued simple interest gets added to your principal at the end of the moratorium period. Your EMI is then calculated on this higher “capitalised” amount, meaning you pay interest on the interest for the rest of the loan tenure — significantly increasing your total cost.
Section 80E lets you deduct the entire interest paid on an education loan from your taxable income, with no upper limit — available for up to 8 years from when repayment starts, or until the interest is fully repaid, whichever is earlier. It's only available under the Old Tax Regime, not the New Regime. For someone in the 30% tax bracket paying ₹2 lakh interest in a year, that's about ₹62,400 saved in tax that year.
Public sector banks like SBI offer the lowest rates — around 8.15% for premier institutes (IITs/IIMs/NITs) via SBI's Scholar Loan, and roughly 8.15–10.15% for other domestic courses. Study-abroad loans typically cost more, around 10.25–10.90% at SBI. Private NBFCs like HDFC Credila and Avanse are more flexible on approvals but usually charge 11–13%. Rates change with RBI repo rate movements — always confirm the current rate with your lender.
Most banks offer collateral-free loans up to ₹7.5 lakh with just a parent/guardian as co-applicant. Students admitted to IITs, IIMs, NITs or top QS-200 global universities can get collateral-free loans up to ₹50 lakh at SBI. Above these thresholds, you'll typically need to pledge property, fixed deposits or other security.
No. RBI rules prohibit prepayment penalties on education loans. If you get a job early or receive a bonus, prepaying — even partially — is one of the most effective ways to cut your total interest cost, since it directly reduces the principal your EMI is calculated on.