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Education Loan Repayment Guide in India

Education Loan Repayment Guide in India

With education costs skyrocketing year by year, it can be difficult to fund your education from your own pockets. This is where education loans can come to your rescue. You can now cover any expense incurred during your degree independently and pay back the amount in easy instalments.

Wondering how that works? Here’s everything you need to know about the education loan repayment process.

Education loan repayment process in India

For starters, we need to understand what a moratorium period is. It refers to a specific period in your loan tenure where you are exempted from repaying the loan. EMI repayment begins only after the moratorium period, but students might also have to pay interest during this period, depending on the lender’s policies.

Most student loan repayment policies differ from lender to lender. Most NBFCs offer a moratorium period, but it is not a payment-free period. Students are expected to start paying interest as soon as they receive the loan amount. But one small waiver NBFCs offer is the option to make partial interest payments per month.

Although, you’re better off making complete payments every month instead of partial ones to not rack up interest towards the end of your tenure.

Also, read: Facts you need to know about Education Loan

Education loan repayment schedule: EMI calculation & prepayment

Understanding your education loan repayment schedule is essential to manage finances effectively. The education loan repayment process typically begins after the course ends or after a moratorium period, which often includes the course duration plus 6–12 months. Lenders calculate EMIs based on loan amount, interest rate, and education loan repayment tenure. Your EMI includes both principal and interest, with interest being higher initially and reducing over time. Knowing how to repay education loan wisely, including options for partial or full prepayment, can lower interest costs. The study loan repayment period varies depending on the lender, and borrowers must follow education loan repayment rules in India, including timely EMI payments. Understanding the student education loan repayment structure and tenure helps plan finances better and ensures smooth completion of the education loan repayment period without penalties.

Education loan repayment rules in India: RBI guidelines & tax benefits

Understanding the education loan repayment rules in India is essential for smooth financial planning. A clear education loan repayment schedule helps track EMIs and manage finances efficiently.

Here’s what borrowers should know:

  • Repayment start & period: The education loan repayment period usually begins after the course or post-moratorium of 6–12 months.
  • EMI structure & tenure: EMIs include principal and interest. Lenders offer flexible education loan repayment tenure based on loan amount and interest rate.
  • Prepayment options: How to repay education loan strategically, through partial or full prepayment, can reduce interest costs.
  • Timely payments: Following the education loan repayment process ensures no penalties.
  • Tax benefits: Student education loan repayment interest is deductible under Section 80E.

How to repay your education loan: Best methods

Here are some tried and tested methods to help you close your education loan faster –

1. Start paying early

Have a comprehensive understanding of interest rates and terms by using an EMI calculator online. Calculating study loan repayment early on can help you prepare a suitable budget for the EMIs. Once you have all this figured out, go ahead and avail of the loan.

In order to quickly get out of student debt, start repaying during the moratorium period itself. Identify areas where you can cut down expenditure and direct that money towards your study loan repayment. This way, you can close your loan before tenure and save a lot of money on interest.

2. Build a budget

Build a budget that skims out all the extravagant expenses from your monthly expenditure. Cut out the unessential expenses and only spend where you have to. Direct the money you saved towards your personal loan repayment. Live sparingly now so that you can live comfortably without student debt hanging on top of your head later.

3. Pay more

Pay more than the minimum monthly instalment whenever you can. This extra money is deducted from the principal amount and helps reduce interest. You can also choose to pay off your loan partly or wholly, provided you have the funds. However, prepayments might attract penalties, so tread accordingly.

Also, read: How To Pay an Education Loan Without Interest?

Tips to manage student loan repayment with ease

Managing your loan becomes easier when you plan ahead and stay informed. A clear education loan repayment schedule helps you track EMIs and avoid missed payments.

Here are simple tips to manage student education loan repayment with ease:

  • Understand how to repay education loan smartly: Choose EMIs that suit your income and expenses.
  • Know the education loan repayment process: Be aware of moratorium rules and auto-debit options.
  • Plan the education loan repayment period early: Budget even before EMIs begin.
  • Choose the right education loan repayment tenure: Balance affordable EMIs with lower interest costs.
  • Follow education loan repayment rules in India: Timely payments protect your credit score.
  • Review study loan repayment options: Partial prepayments can reduce overall interest.

These steps help ensure smooth, stress-free repayment.

Common mistakes to avoid in education loan repayment

Avoiding common errors can make student education loan repayment smoother and more affordable. Understanding the basics early helps you stay on track.

Here are key mistakes to avoid:

  • Ignoring the education loan repayment schedule, leading to missed EMIs
  • Not learning how to repay education loan efficiently based on income
  • Misunderstanding the education loan repayment process and moratorium rules
  • Poor planning of the education loan repayment period
  • Choosing an unsuitable education loan repayment tenure
  • Overlooking education loan repayment rules in India
  • Delaying study loan repayment prepayments, increasing interest costs

Conclusion

Education loans can help you cater to all your financial needs and secure yourself a bright future. At Tata Capital, we offer competitive interest rates starting at just 10.99% over a flexible tenure of 1 to 6 years. From hostel charges to course books, we can tailor a loan plan for your specific needs.

Visit our website to check out loan eligibility and calculate monthly payments using our education loan EMI calculator. Connect today!

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FAQs

What is the typical repayment period for an education loan in India?

The education loan repayment period depends on lender policies, loan amount, and chosen education loan repayment tenure outlined in your education loan repayment schedule.

Can I make education loan prepayments? Are there any foreclosure charges?

Yes, most financial institutions allow prepayment in the education loan repayment process. Under education loan repayment rules in India, some public sector lenders do not charge foreclosure fees, reducing total study loan repayment costs.

How does the moratorium period work for student loans?

The moratorium covers course duration plus 6-12 months. During this phase, EMIs are not required, but interest may accrue, affecting the overall student education loan repayment amount later.

What strategies can help me repay my education loan faster?

Understanding how to repay education loan smartly includes choosing shorter education loan repayment tenure, making partial prepayments, increasing EMIs with income growth, and closely tracking your education loan repayment schedule.

 

Are there any tax benefits on education loan repayment?

Yes. Under Section 80E, interest paid during student education loan repayment is tax-deductible for up to eight years, easing the financial burden during the education loan repayment period.

What happens if I miss an EMI on my student education loan?

Missing EMIs disrupts the education loan repayment process, attracts penalties, impacts credit score, and may violate education loan repayment rules in India, making future borrowing difficult.

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