Education Loan Moratorium Period
Course + 1 year repayment holiday — how interest accrues, capitalisation, extensions and whether to pay interest while studying.
Updated 27 September 2026 · 8 lenders trackedWhat you need to know
The moratorium is the period when no EMI is due — normally the course duration plus 1 year (SBI Global Ed-Vantage: course + 6 months). Interest still accrues, usually as simple interest on the amount disbursed. At the end of the moratorium, unpaid interest is added to the principal (capitalised) and EMIs are computed on the larger amount. Paying the interest during study avoids this.
What happens to interest
Example: ₹10,00,000 disbursed at the start of a 2-year course at 9.50%. The moratorium is the course plus 1 year = 36 months, during which simple interest of ₹7,917 a month accrues — ₹2,85,000 in total. Unpaid interest is added to the principal when EMIs start (10-year repayment).
| Choice during study | Interest you pay while studying | Principal when EMIs start | EMI | Total you pay |
|---|---|---|---|---|
| Pay nothing during study | ₹0 | ₹12,85,000 | ₹16,628 | ₹19,95,310 |
| Pay half the interest | ₹1,42,500 (₹3,958/month) | ₹11,42,500 | ₹14,784 | ₹19,16,541 |
| Pay all interest monthly | ₹2,85,000 (₹7,917/month) | ₹10,00,000 | ₹12,940 | ₹18,37,771 |
Assumes the whole loan is disbursed on day one; in practice fees are disbursed term by term, so accrued interest is lower. Some banks also cut the rate if you service interest during the moratorium.
By course length
| Course length | Moratorium (course + 1 yr) | Interest accrued | EMI if interest unpaid | EMI if interest paid during study |
|---|---|---|---|---|
| 1 year | 24 months | ₹1,90,000 | ₹15,398 | ₹12,940 |
| 2 years | 36 months | ₹2,85,000 | ₹16,628 | ₹12,940 |
| 3 years | 48 months | ₹3,80,000 | ₹17,857 | ₹12,940 |
| 4 years | 60 months | ₹4,75,000 | ₹19,086 | ₹12,940 |
| 5 years | 72 months | ₹5,70,000 | ₹20,315 | ₹12,940 |
₹10,00,000 at 9.50%, simple interest during the moratorium, 10-year repayment. Full amount assumed disbursed upfront.
Moratorium by lender
| Lender | Collateral-free limit | Margin money | Moratorium |
|---|---|---|---|
| Union Bank Education Loan | ₹7.5 lakh for CGFSEL-covered loans (BankBazaar also lists ₹4 lakh — confirm with the branch) | 5% (India) / 15% (abroad) | Course period + grace period |
| Bank of Baroda Education Loan | Baroda Gyan / Scholar: ₹4 lakh. Premier Institutions (India): Category AA ₹40 lakh, A ₹30 lakh, B ₹15 lakh, C ₹10 lakh | Baroda Scholar: nil up to ₹4 lakh, 15% for ₹4–7.5 lakh, above ₹7.5 lakh nil (premier) / 10% (non-premier). Premier Institutions (India): nil / 5% / nil | Course + 1 year |
| Canara Bank Education Loan | IBA Model scheme: ₹7.5 lakh (CGFSEL cover); Vidya Turant: fully collateral-free | IBA Model: nil up to ₹4 lakh; 5% (India) / 15% (abroad) above. Vidya Turant: nil | Course + 1 year |
| SBI Education Loan | Student Loan ₹7.5 lakh; Scholar Loan up to ₹50 / ₹40 / ₹30 lakh for List AA / A / B institutes (with parent co-obligation); Global Ed-Vantage up to ₹50 lakh at select institutions | Student Loan: nil up to ₹4 lakh; 5% (India) / 15% (abroad) above. Scholar Loan: 100% finance | Student Loan and Scholar Loan: course + 1 year; Global Ed-Vantage: course + 6 months |
| Bank of India Education Loan | ₹7.5 lakh (parent co-borrower; CGFSEL cover) | Nil up to ₹4 lakh; 5% (India) / 15% (abroad) above | Course + 1 year |
| PNB Education Loan | ₹7.5 lakh (with parent co-borrower) | Nil up to ₹4 lakh; 5% (India) / 15% (abroad) above | Course + 1 year |
| Credila Education Loan | Up to ₹75 lakh (profile and university dependent) | Nil — up to 100% of cost can be financed | Course + 12 months; choose partial simple interest, full simple interest or full EMI during study |
| HDFC Bank Education Loan | Up to ₹4 lakh (co-borrower required) | Nil up to ₹4 lakh; 5% (India) / 15% (abroad) above | Course-linked for select courses; simple interest is charged during the moratorium |
As published by each lender or compiled by aggregators; premier-institute limits depend on the list your institute is on.
Good to know
- If you get a job before the moratorium ends, you can start EMIs early.
- If the course takes longer for valid reasons, banks may extend the moratorium on request.
- Credila lets you choose partial simple interest, full simple interest or full EMI during study.
- Under CSIS (family income up to ₹4.5 lakh) the government pays all moratorium interest; under PM-Vidyalaxmi it pays 3% (income up to ₹8 lakh).
- Interest you pay during the moratorium counts for Section 80E in that year.
Moratorium & EMI calculator
Frequently asked questions
Is the moratorium automatic?
Yes, the standard moratorium is built into the loan. You may still choose to pay interest monthly.
Does interest accrue if I do not pay during the moratorium?
Yes. Only the EMI is deferred — interest keeps running and is added to your loan when repayment starts.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.