Plan your education loan repayment with precision using our professional calculator. Account for moratorium periods, calculate tax savings under Section 80E, and optimize your repayment strategy for study abroad or domestic education loans.
Education loan EMI is calculated using the standard amortization formula[citation:10]:
Scenario: ₹20 lakh loan at 8.5% interest for 15 years with 12-month moratorium
Calculation:
Total Cost: ₹35.2 lakhs (₹20L principal + ₹15.2L interest)
Tax Savings (Section 80E): Approximately ₹3.06 lakhs over 8 years[citation:1]
Even during moratorium periods, interest continues to accrue daily on your education loan[citation:6]:
This accrued interest gets capitalized (added to your principal) when the moratorium ends, increasing your total loan amount[citation:6]. Some lenders offer partial interest payment options during studies to reduce this capitalization effect[citation:1].
Typical Loan: ₹25-40 lakhs for US/UK/Australia universities
Key Considerations:
Strategy: Use partial interest payments during studies to reduce capitalization. Plan for 12-15 year tenure to keep EMI manageable on entry-level international salaries.
Typical Loan: ₹50 lakhs+ for MBBS/MD programs
Key Considerations:
Strategy: Consider loans with interest subsidy schemes. Plan residency period income for partial repayments. Use Section 80E benefits fully during early career high-tax years.
Typical Loan: ₹15-25 lakhs for 1-2 year programs
Key Considerations:
Strategy: Maintain pre-EMI payments during course. Opt for shorter tenure (8-10 years) expecting post-MBA salary hike. Use bonus payments for prepayments.
The moratorium period is the time during which you don't need to make EMI payments, typically covering your course duration plus 6-12 months after graduation[citation:7]. However, interest continues to accrue during this period and gets capitalized (added to your principal) when repayments begin. This increases your total loan amount and subsequent EMIs.
Some lenders offer options to pay partial or full interest during the moratorium to reduce capitalization[citation:1]. For a ₹20L loan at 8.5%, expect ₹1.7L interest accrual during a 12-month moratorium.
Section 80E of the Income Tax Act allows deduction for interest paid on education loans for higher education[citation:10]. Key features:
Example: ₹2.5L annual interest payment can save ₹75,000 tax annually at 30% bracket.
This depends on your financial situation and career trajectory:
Longer Tenure (15-20 years):
Shorter Tenure (5-10 years):
Recommended Strategy: Start with longer tenure, make prepayments as income increases. Each ₹1L prepayment can save ₹80,000-₹1,20,000 in interest over the loan term.
Education loans typically use daily reducing balance method with monthly compounding[citation:6]:
For a ₹20L loan at 8.5%:
Most bank calculators lack advanced features needed for proper education loan planning[citation:1]:
| Feature | Bank Calculators | Professional Tool |
|---|---|---|
| Moratorium Customization | Limited or none | Full customization |
| Tax Benefit Analysis | Not included | Section 80E calculations |
| Interest Capitalization | Often overlooked | Accurate modeling |
| Partial Payment Options | Limited support | During-study payment plans |
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