Question 1

What is the moratorium period in education loans?

Accepted Answer

The moratorium period is the grace period after completing your course during which you don't need to pay EMIs. It typically ranges from 6 months to 1 year after course completion. However, interest continues to accrue during this period and gets added to your principal, increasing the effective loan amount.

Question 2

How does moratorium interest increase my education loan?

Accepted Answer

During the moratorium period (course duration + grace period), interest accrues on your original loan amount and compounds monthly. For example, a ₹20 lakh loan at 9% interest with a 5-year moratorium (4-year course + 1-year grace) can increase the effective loan to approximately ₹31 lakh due to accumulated interest.

Question 3

Can I get tax benefits on education loan interest?

Accepted Answer

Yes, under Section 80E of the Income Tax Act, you can claim a deduction on the entire interest paid on education loans (no upper limit) for up to 8 years from the year you start repaying. This deduction is available only for higher education loans taken from approved financial institutions.

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