The moratorium period is the gap between loan disbursement and EMI repayment. It's a crucial concept that every education loan borrower must understand — it determines when you start paying, and how much interest accumulates.
What is the Moratorium Period?
The moratorium (also called the repayment holiday or grace period) is the time during which you do NOT pay EMIs on your education loan. It typically covers:
Course duration + 6 or 12 months after course completion (varies by bank)
Example: 2-year MBA → moratorium = 2 years + 6 months = 2.5 years. EMIs start after 2.5 years.
Does Interest Accrue During Moratorium?
Yes — for most loans. Simple interest accrues during the moratorium period. This interest is either:
1. Added to principal (most common) — total principal grows. EMI is calculated on this higher amount.
2. Paid monthly as simple interest — reduces total loan burden significantly if you can afford it during studies.
Smart tip: If you or your parents can pay the simple interest during the moratorium, do it. For a ₹20L loan at 11% over 2 years, that's ₹4.4L in interest you avoid capitalising.
Moratorium Period by Lender — 2026
| Lender | Moratorium Period | Interest During Moratorium |
|---|---|---|
| SBI | Course + 12 months | Simple interest (optional to pay) |
| HDFC Credila | Course + 12 months | Compounded and added to principal |
| Avanse | Course + 6 months | Simple interest preferred during course |
| Auxilo | Course + 12 months | Flexible — discuss with advisor |