Education Loan Moratorium and Tax Benefits
Education loans come with a moratorium period — usually the course duration plus 6 months to 1 year — during which you do not pay EMIs. However, simple interest accrues during this time and gets added to your principal if unpaid.
Under Section 80E, the entire interest paid on an education loan is 100% tax-deductible for up to 8 years, with no upper limit. Loans above ₹7.5 lakh typically require collateral.
Frequently Asked Questions
What is the moratorium period in an education loan?
A holiday period (course duration plus 6 months to 1 year) during which no EMIs are due. Simple interest still accrues and is added to your loan if unpaid.
Are there tax benefits on education loans?
Yes. Under Section 80E, the entire interest amount paid is 100% tax-deductible for up to 8 years.