Education Loan Rules (2026)
- •Loans up to ₹4 lakh: no collateral, no margin money required.
- •Loans ₹4-7.5 lakh: third-party guarantee needed; above ₹7.5 lakh needs collateral.
- •Margin money: 5% for studies in India, 15% for abroad.
- •Section 80E: full interest is tax-deductible for up to 8 years, no upper limit.
The Real Problem This Solves
Students celebrate the moratorium ("no EMIs while studying") without realising interest is silently piling up the whole time.
Skip paying it, and that interest gets added to your loan, so you pay interest on interest for years. This calculator shows the true cost of waiting.
How the Moratorium Trap Works
During the moratorium (course duration + 6-12 months), you don't pay EMIs, but simple interest accrues. If unpaid, it's added to your principal when repayment starts.
Example: Arjun takes a ₹10 lakh loan at 10% for a 2-year course with a 1-year grace period (3-year moratorium). If he pays nothing during those 3 years, about ₹3 lakh of interest gets added, so his EMIs are calculated on ₹13 lakh. If he pays just the simple interest (~₹8,300/month) during study, his principal stays at ₹10 lakh, saving lakhs over the full loan.
| Strategy | Principal at EMI Start | Impact |
|---|---|---|
| Pay interest during study | ₹10,00,000 | Lower EMIs, big long-term saving |
| Pay nothing during study | ₹13,00,000 | Higher EMIs, interest on interest |
Frequently Asked Questions
Should I pay interest during the moratorium?
If you can afford it, yes. It prevents the interest from being added to your principal, and many banks give a 0.5%-1% rate concession for servicing interest during study.
Do I need collateral for an education loan?
Loans up to ₹7.5 lakh generally need no tangible collateral. Above that, banks require security like property or an FD.
Is a student loan the same as an education loan?
Yes. In India, banks officially call the product an education loan; "student loan" and "study loan" are everyday names for the same thing. This calculator works identically whichever term your bank uses.
Does this work for MBA, MBBS, and studying abroad?
Yes. The EMI and moratorium math is the same for every course — what changes is the amount, margin money (5% for India, 15% for abroad), and rate. Enter your sanctioned amount and rate; MBBS and foreign degrees typically mean larger loans, which makes paying moratorium interest even more valuable.
What is the education loan interest rate in 2026?
Public banks typically charge around 8.1%-11% depending on the amount, collateral, and institute; NBFCs like HDFC Credila run higher. Girl students often get a 0.5% concession. Check your exact offer letter and enter that rate above.
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