Education loan calculator for the moratorium, the EMI and the tax deduction
An education loan works differently from other loans. Interest starts on the day the bank pays the college, but nothing is due until the course ends and a moratorium — usually six or twelve months — has passed. This education loan calculator follows that timeline: simple interest on each disbursement during study, either paid as you go or added to the loan when repayment starts, then the EMI, the total cost and a schedule by tax year.
Two more modes cover other countries. UK plan repayment uses the 2026/27 thresholds for Plans 1, 2, 4, 5 and the Postgraduate Loan, repays 9% (6% for postgraduate) of pay above the threshold, and shows when the loan clears or is written off. US / fixed repayment gives the level monthly payment on a balance, rate and term, and the saving from paying extra. US income-driven plans, which changed under the 2025 law, are not modelled.
It compares paying the interest during study with letting it add up, and works out the tax saved under section 129 of the Income-tax Act, 2025 — the old section 80E — for the eight years the deduction lasts. Everything runs in your browser; results are estimates, not financial or tax advice.
How to use the Education Loan Calculator
- Choose Study in India or Study abroad and enter the Loan amount and Interest rate.
- Say whether the bank pays the institution All at the start or Year by year, and set the course length, moratorium and repayment period.
- Pick Let it add up or Pay it monthly for interest before repayment, and any rate cut your bank gives for paying.
- Enter the First disbursement date and the borrower’s taxable income for the tax table.
- Compare both approaches, then read the schedule by tax year or month and press Download CSV.
Education Loan Calculator features
Simple interest, the way banks charge it
Interest during study and moratorium is simple interest on the amount disbursed so far, added to the loan only when EMIs begin.
Pay now or later, side by side
Monthly interest while studying, EMI, total interest and total repaid for both choices.
Year-by-year disbursement
Fees paid each year accrue interest for less time, and the calculator counts each instalment separately.
Eight-year tax window
Interest paid each tax year, which years fall inside the section 129 window, and the tax saved.
Worked example: ₹8 lakh at 10% for a two-year course
The loan is paid out in April 2026, the course lasts two years and the moratorium twelve months, so EMIs start in April 2029. Simple interest for 36 months is ₹8,00,000 × 10% × 3 = ₹2,40,000. Left to add up, it turns the loan into ₹10,40,000; repaid over ten years the EMI is ₹13,744 and total interest ₹8,49,241.
Pay the interest instead — ₹6,667 a month while studying — and the EMI is ₹10,572 on the original ₹8 lakh, with total interest of ₹7,08,647. That is ₹1,40,594 less, because the ₹2,40,000 never earns interest over the EMI years. If the college is paid ₹4 lakh a year instead of all at once, the interest before repayment falls to ₹2,00,000.
Tax deduction under section 129 (formerly 80E)
- Interest — not principal — on a loan for higher education of yourself, your spouse, your children or a student you are legal guardian of, from a bank, financial institution or approved charity.
- No upper limit, for the tax year you start paying interest and the next seven, or until the interest is paid off. Only the borrower who pays can claim.
- Old regime only: the new regime under section 202 does not allow it.
- In the example, with ₹12 lakh of taxable income the first year of EMIs (2029-30) carries ₹1,01,129 of interest and saves ₹31,550. Paying interest during study starts the window earlier — ₹80,000 in 2026-27 saves ₹24,960 — so later EMIs may fall outside it.
Loans for India and abroad, and the schemes that help
- The IBA model education loan scheme set limits of ₹10 lakh for study in India and ₹20 lakh abroad, with repayment over up to 15 years; banks now lend much more — SBI’s Global Ed-vantage goes up to ₹3 crore — but above ₹7.5 lakh they usually want collateral.
- PM-Vidyalaxmi (approved in November 2024) offers collateral-free, guarantor-free loans to students at eligible institutions, a 75% government guarantee up to ₹7.5 lakh, and 3% interest subvention on loans up to ₹10 lakh for family incomes up to ₹8 lakh.
Rules used (as of October 2026)
IBA model education loan scheme (simple interest during study and moratorium, accrued interest added when repayment starts); SBI student loan terms on sbi.bank.in (course + 12 months, up to 15 years, servicing interest optional); PIB release on PM-Vidyalaxmi, 6 November 2024; Income-tax Act, 2025, sections 129 and 202, with tax from the same engine as the income tax calculator. Section numbers come from secondary summaries — confirm before filing.
Education Loan Calculator FAQ
How is interest calculated during an education loan moratorium?
As simple interest on the amount disbursed, from each disbursement date until repayment starts. If you do not pay it, the education loan calculator adds it to the loan when EMIs begin, as banks do, and the EMI is worked out on the larger amount.
Is it better to pay interest during the course?
If you or a parent can, yes: the EMI and the total interest are lower, some banks cut the rate, and the tax deduction can start earlier. In the example it saves ₹1,40,594.
How many years can I claim the education loan deduction?
Eight: the tax year in which you start paying interest and the seven after it. There is no cap on the amount, but it is available only in the old tax regime.
Will I repay my UK student loan in full?
Often not: repayment is a share of pay above the threshold, so the balance may be written off first (Plan 2 after 30 years, Plan 5 after 40). Enter your pay, growth and rate to see both amounts; rates reset each September, so check GOV.UK.
Can parents claim the deduction?
Yes, if the loan is in the parent’s name for the child’s higher education and the parent pays the interest.
What is the moratorium period on an education loan?
The course period plus a grace period — commonly twelve months under the IBA model scheme and at many banks, sometimes six — before EMIs start.