Education Loan EMI Calculator

What is an Education Loan EMI?

An Education Loan EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month for an education loan. Education loans are designed to cover tuition fees, living expenses, books, equipment, and other education-related costs for students pursuing higher education.

Unique Features of Education Loans

• Moratorium Period: Most education loans offer a grace period (moratorium) during which you don't have to pay EMIs. This period typically includes the course duration plus 6-12 months after course completion or getting a job, whichever is earlier.
• Simple Interest During Study: Many lenders charge only simple interest during the study period, which is added to the principal amount after the moratorium period.
• Tax Benefits: In many countries, the interest paid on education loans is eligible for tax deductions under income tax laws.
• Lower Interest Rates: Education loans often have lower interest rates compared to personal loans as they are considered as priority sector lending by many banks.

Factors Affecting Education Loan EMI

• Loan Amount: The principal amount borrowed for education.
• Interest Rate: The rate at which interest is charged on the loan amount.
• Loan Tenure: The duration for which the loan is taken, typically ranging from 5 to 15 years.
• Moratorium Period: The grace period during which only interest is charged, or no payment is required.
• Course Type: Domestic or international education, which affects the loan amount and interest rate.
• Collateral: Whether the loan is secured with collateral or not, which can affect the interest rate.

Tips for Managing Education Loan EMIs

1. Start paying interest during the study period if possible, to reduce the overall loan burden.
2. Consider part-time work during studies to start repaying the loan early.
3. Explore scholarship opportunities to reduce the loan amount needed.
4. Prepay the loan whenever possible, as most education loans don't have prepayment penalties.
5. Claim tax benefits on the interest paid on education loans to reduce your tax liability.

Documents Required for Education Loans