Education loan EMI: planning your repayment
An education loan is the first major financial commitment for many young borrowers. Understanding the EMI before you take the loan — not after — lets you plan your first salary and post-study finances realistically.
Moratorium period: the hidden interest trap
Most education loans come with a moratorium period (no EMI required during study + 6–12 months). But interest accrues during this period. If you take a ₹10 lakh loan at 10% p.a. for a 3-year course, by the time you start repaying you already owe ~₹13.3 lakh in principal + accrued interest.
Strategy: pay the interest component during the moratorium (even ₹5,000–8,000/month) to avoid this compounding. Many banks allow this.
Current education loan rates (2025)
| Bank/Scheme | Rate | Max loan | Notes |
|---|---|---|---|
| SBI Scholar Loan | 8.15% | ₹40 lakh | For top 200 institutions |
| SBI Student Loan | 10.15% | ₹20 lakh abroad | Collateral for >₹7.5L |
| HDFC Credila | 10–14% | ₹75 lakh | Flexible structure |
| Vidya Lakshmi Portal | 8–12% | ₹10 lakh | Government-backed, domestic |
| PM Vidyalaxmi (2024) | ~10% | ₹10 lakh | Full collateral-free |
Section 80E: tax deduction on interest
The entire interest paid on an education loan is deductible under Section 80E — no cap. If you earn ₹8 lakh p.a. and pay ₹60,000 in education loan interest, your taxable income drops to ₹7.4 lakh. This deduction is available for 8 years from the start of repayment.
Note: only available under the old tax regime. Not available under new regime.