Education loan EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), but the principal grows during the moratorium because interest accrues while you're studying. A ₹15 lakh loan at 10.25% with a 30-month moratorium adds ~₹3.8 lakh of capitalised interest, so EMIs are calculated on ₹18.8 lakh. Section 80E lets you deduct the full interest paid (no cap) for 8 assessment years under the old tax regime.
About this calculator
An education (student) loan calculator in India shows the full cost of financing higher education — computing monthly EMI, total interest, and the critical impact of the moratorium period. As of April 2026, domestic education loan rates range from 8.50% (SBI Scholar Loan for IIT/IIM/AIIMS) to 10.25% for general domestic courses, and 10.50–11.50% for abroad education.
The most important concept for Indian education loans is the moratorium: you typically don't pay EMIs during your course plus 6–12 months after. However, interest accrues during this period. On a ₹15 lakh loan at 10.25%, a 30-month moratorium adds approximately ₹3.8 lakh in capitalised interest — your EMIs are calculated on ₹18.8 lakh, not ₹15 lakh. The Education Moratorium Chart visualises this balloon effect.
Section 80E of the Income Tax Act allows a full deduction (no upper cap) on interest paid on education loans for up to 8 assessment years — but only under the old tax regime. At a 30% tax bracket, ₹2 lakh annual interest saves ₹62,400 in taxes. Use the Tax Saving Calculator to quantify your exact benefit.
Government schemes like the Central Sector Interest Subsidy (CSIS) provide 100% interest subsidy during the moratorium for borrowers with family income below ₹4.5 lakh per year. The Vidya Lakshmi Portal (vidyalakshmi.co.in) aggregates multiple bank schemes and allows a single application.
Common uses
- Estimate monthly payments after graduating
- See how much interest capitalizes during a deferment period
- Compare standard vs extended repayment plans
- Calculate total loan cost for different degree programs
- Plan whether to make interest-only payments during school
Frequently asked questions
What is student loan capitalization?
Capitalization occurs when unpaid interest is added to your loan principal. This commonly happens after deferment or forbearance. Once capitalized, that interest starts earning more interest, increasing your total repayment amount.
What is the difference between subsidized and unsubsidized student loans?
With subsidized loans, the government pays the interest while you are in school, during deferment, and grace periods. With unsubsidized loans, interest accrues from the day the loan is disbursed, even while you are still studying.
Should I pay off student loans or invest?
If your student loan interest rate is lower than the expected investment return (historically 7–10% for equities), investing may build more wealth long-term. If the rate is high (above 7%), paying off the loan first is often the better financial move.