Introduction
Education loans are one of the most common ways for students to finance higher education in India and abroad. But did you know that banks and NBFCs offer a moratorium period on education loans? This feature helps students and parents reduce the immediate financial burden during the study period.
In this blog, we’ll explain what a moratorium in education loan is, how it works, its benefits, and what you should be aware of before applying.
What is a Moratorium in Education Loan?
A moratorium period is simply an EMI holiday ⏳. During this time, the borrower and co-applicant are not required to pay EMIs.
- It generally lasts for the course duration.
- After the course, students also get an additional grace period of 6–12 months to settle down and start earning.
- However, interest continues to accrue during this period, which means the total loan amount payable will be higher.
Benefits of Moratorium in Education Loan
✅ Financial relief for students & parents – No EMI pressure while the student is studying.
✅ Time to start earning – The 6–12 months grace period allows fresh graduates to find a job before repayment begins.
✅ Improved affordability – Students can pursue higher studies without immediate repayment stress.
✅ Flexible repayment – Borrowers can choose to pay simple interest during the moratorium to reduce future debt.
Things to Keep in Mind
⚠️ Interest still applies – While EMIs are not required, banks continue to charge interest, which gets added to the loan amount.
⚠️ Higher repayment burden later – The longer you delay repayment, the larger your EMIs may become.
⚠️ Different policies by lenders – Some banks may insist on interest payment during the moratorium, while others may defer it completely.
Example of Moratorium in Education Loan
Let’s say you take an education loan of ₹10,00,000 for a 2-year MBA program.
- During these 2 years, you don’t pay EMIs.
- You also get an additional 12-month grace period after finishing your MBA.
- But the interest on ₹10,00,000 keeps adding up during this period.
If you choose to pay interest during the moratorium, your final repayment burden will be much lighter.
FAQs on Moratorium in Education Loan
1. Do I have to pay interest during the moratorium?
👉 It depends on the lender. Some require only simple interest payment, while others allow complete deferment.
2. Will my CIBIL score be affected during the moratorium?
👉 No, as long as you follow the repayment schedule after the moratorium ends.
3. Can I extend the moratorium period?
👉 Usually, lenders offer course duration + 6–12 months. Extensions are rare and depend on special circumstances.
Conclusion
A moratorium in education loan is a powerful tool that gives students breathing space to complete their education and start earning before EMIs begin. However, it is important to plan wisely and, if possible, pay simple interest during the moratorium to avoid a heavy repayment burden later.
If you are a student or parent looking for the best education loan guidance, reach out to Shivafinz today for personalized support.