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Loan · FINANCIAL TOOLS

Education Loan Calculator

Work out an education loan instalment with the moratorium modelled — including what capitalised interest adds to the debt.

Understand the calculation

Calculation logic, formula, example and guardrails behind the estimate.

How it works

The loan is treated in two phases. Through the moratorium — the course plus a grace period — nothing is repaid, but interest accrues monthly on the balance. Unless you service it, that interest is added to the principal, and repayment then begins on the larger figure.

This is why the instalment matters more than the sanctioned amount. On ₹20 lakh at 10% with a four-year moratorium, the balance at repayment start is ₹29,78,708 — the EMI is computed on that, not on ₹20 lakh, and it is nearly 50% higher than a naive calculation would suggest.

More detail

The calculator also prices the alternative. Servicing interest as it accrues costs money during the course, when a student typically has none, but it stops the debt compounding on itself. The difference over the loan's life is reported explicitly so the choice can be made deliberately.

The whole loan is assumed disbursed on day one. Real disbursement is tranche-wise per semester, which means less interest accrues than shown here — so treat these figures as the conservative end of the range.

To see what repaying early would save, use the prepayment calculator.

If another lender offers a lower rate, see the balance transfer calculator.

To fund a course without borrowing at all, try the goal SIP calculator.

Formula

P' = P × (1 + r)^m; EMI = P' × r × (1+r)^n ÷ ((1+r)^n − 1)

The first expression is what most education loan calculators omit. Interest compounds monthly through the moratorium, so P' is materially larger than P — and the EMI is computed on P', not on what you borrowed.

P
Amount sanctioned.
P'
Principal at repayment start, after capitalisation.
r
Monthly interest rate.
m
Months of moratorium.
n
Months of repayment.
Worked example

₹20,00,000 at 10%, with a four-year moratorium covering the course and grace period, repaid over ten years, with interest capitalised.

  1. 01Balance when repayment starts₹20,00,000 × 1.008333⁴⁸ = ₹29,78,708
  2. 02Interest capitalised₹9,78,708
  3. 03Monthly instalment₹39,364
  4. 04Interest during repayment₹17,44,954
  5. 05Total interest₹27,23,662
  6. 06Total repaid₹47,23,662

The interest exceeds the amount borrowed — ₹27.2 lakh on ₹20 lakh — and ₹9.8 lakh of it accrued before a single instalment was due. Servicing interest through the course instead, at around ₹16,700 a month, would have brought the total to ₹39,71,618: ₹7,52,044 less. That is the price of the default option.

Frequently asked questions

Common questions about the education loan calculator and the assumptions behind it.

Disclaimer

This calculator is provided for general information and planning only. It is not investment, tax or legal advice, and it does not take your personal circumstances into account. Outputs are estimates based on the assumptions stated on this page, exclude taxes and charges unless said otherwise, and market-linked returns are not guaranteed — the value of investments can fall as well as rise. Lending terms, rates and eligibility are decided by the lender. For advice on your own situation, speak to a qualified professional, several of whom you can consult on Finvestalk.