How the Education Loan EMI Calculator Works
Enter the sanctioned loan amount, the interest rate, and the repayment tenure that begins once your EMIs start.
Set the moratorium period — your course duration plus the grace period your lender allows after it, commonly six months to a year. Banks often describe this as 'course period + 6 months' or 'course period + 1 year'.
Then choose how interest during the moratorium is handled. This single choice makes a large difference to what you eventually repay, so it's worth testing both options.
If you service the interest — paying it monthly while you study — the principal stays untouched and your eventual EMI is calculated on the original loan amount.
If the interest is capitalised, it accrues and is added to your principal. EMIs are then calculated on that larger amount, so you end up paying interest on interest.
Formula Used
Interest accrues through the moratorium first, then the EMI is calculated on whatever principal remains when repayment begins:
P′ = P × (1+r)^m (if capitalised), EMI = P′ × r × (1+r)^n / ((1+r)^n − 1)- PSanctioned loan amount
- P′Principal when EMIs begin — equal to P if you service the interest
- rMonthly interest rate (annual rate ÷ 12 ÷ 100)
- mMoratorium period in months
- nNumber of monthly instalments in the repayment tenure
Example Calculation
Suppose you borrow 10,00,000 at 10% a year, with a 3-year moratorium and a 7-year repayment tenure, and the interest is capitalised.
- Loan Amount1,000,000
- Interest Rate10% p.a.
- Moratorium36 months
- Repayment Tenure7 years
- ResultPrincipal at EMI start ≈ 1,348,182 · Monthly EMI ≈ 22,381 (Total Interest: ≈ 880,039)
Important Assumptions
- The full loan amount is assumed to be disbursed upfront. In practice, education loans are usually released semester by semester, so real interest during the moratorium is often lower than shown here.
- Capitalised interest is compounded monthly during the moratorium, which is the most common bank practice. Some lenders compound at different intervals, or apply simple interest during the course.
- Interest is calculated on a reducing monthly balance at a fixed rate throughout. Most education loans are floating-rate, linked to a benchmark that can move during your course.
- Any interest subsidy you qualify for under a government scheme is not deducted. If you're eligible, your actual cost will be lower.
- Processing fees, insurance premiums and margin money contributions are not included.
- This calculator does not model the Section 80E deduction available on education loan interest, which reduces the after-tax cost for the person repaying the loan.