When students or parents apply for an education loan in India, one of the most common terms they hear is moratorium period. Many get excited thinking this means a complete EMI holiday. But is a moratorium really good, or does it add financial pressure later? Let’s break it down.
🔎 What is a Moratorium in Education Loan?
A moratorium period is a repayment holiday given by banks and NBFCs on education loans.
✅ During this period, students and co-applicants are not required to pay the loan EMIs.
✅ It usually covers the course duration + an additional 6 to 12 months grace period after completion.
However, while you don’t pay EMIs, interest continues to accumulate on your loan.
✅ Advantages of Moratorium in Education Loan
- Financial Breathing Space – Students and parents don’t have to worry about EMIs during studies.
- Time to Secure Employment – The grace period allows graduates to find a job before starting repayment.
- Flexibility for Co-Applicants – Parents/guardians get temporary relief from financial burden.
❌ Disadvantages of Moratorium in Education Loan
- Interest Accumulation – Even if EMIs are on hold, interest keeps piling up.
- Higher Loan Burden – By the time repayment starts, the outstanding amount is much higher.
- Financial Strain Later – Students may face heavier EMIs once the moratorium ends.
💡 Expert Tip from Shivafinz
If possible, pay at least the interest amount during the moratorium.
This will prevent your loan from snowballing into a large debt and make repayment smoother.
📊 Moratorium – Good or Bad?
- Good ✅ for students who genuinely need financial relief during studies.
- Bad ❌ in terms of financial planning, as it increases the total cost of the loan.
📌 Conclusion
A moratorium in education loans is a double-edged sword. While it provides immediate relief, it can become costly in the long run. The best approach is to plan smartly and pay at least the interest during this period.
If you are planning to apply for an education loan in India or abroad, or want expert advice on repayment strategies, reach out to Shivafinz for personalized guidance.