Your Education Loan Moratorium Is Ending — 5 Things to Do Before Your First EMI

The moratorium on your education loan typically ends 6 months after you complete your course — or 12 months after your first job, whichever is earlier, depending on your bank's terms. When that date arrives, the EMI begins. For many borrowers, the first EMI is larger than expected.

Here are five things to do in the month before your moratorium ends — while you still have time to act.

1. Get Your Actual Outstanding Balance from the Bank

Do not assume you owe what you originally borrowed. If your bank capitalised the moratorium interest (added it to the principal), your outstanding balance is significantly higher than the original loan amount.

Request a loan account statement from the bank — online or in branch. Look for two numbers: original principal disbursed, and current outstanding. The difference is the accumulated interest from the moratorium period. On a ₹10 lakh loan at 10.5% over 4.5 years, that difference is typically ₹4–₹4.5 lakh.

2. Calculate What Your Actual EMI Will Be

Your bank will tell you the EMI — but run your own calculation using the current outstanding balance (not the original loan amount), the contracted interest rate, and the remaining repayment tenure. Use the GearsKit calculator for this.

Banks sometimes calculate the EMI on the original principal, which understates it. Others recalculate based on the post-moratorium outstanding. Knowing the right number before the first debit prevents a cash flow shock.

3. Set Up Auto-Debit Mandated from the Right Account

Most banks require an auto-debit NACH mandate for education loan EMIs. Ensure the mandate is linked to a salary account that will consistently have funds on the due date — typically the 1st, 5th or 10th of the month.

Missing even one EMI on an education loan can trigger a negative mark on the CIBIL score for both the borrower and the co-borrower (typically your parent). Unlike home loans, education loans do not always come with a phone reminder before debit. Set your own calendar alert 5 days before the due date.

4. Make One Part Payment If You Can

If you have received a joining bonus or have savings, consider making a part payment before the first EMI. This reduces the outstanding principal before repayment officially starts — which means the EMI calculated by the bank is on a lower base.

Even ₹25,000–₹50,000 applied before the first EMI reduces the monthly payment and the total interest paid over the loan's life. Government bank loans (SBI, Bank of Baroda) do not charge prepayment penalties on floating-rate loans.

5. Confirm Your Section 80E Eligibility and Get the Interest Certificate Ready

As soon as repayment begins, you are eligible to claim Section 80E deduction on the interest component of your EMIs. The deduction runs for 8 consecutive years from the first year of repayment — with no upper limit on the interest amount.

Contact your bank in April (after the financial year ends) for an interest certificate showing how much of the year's payments went to interest. File this with your ITR. If your income is in the 20% slab, you save ₹20 in tax for every ₹100 of interest paid. At 30%, that saving is ₹30 per ₹100.

One More Thing: Update Your Address and Contact Details

Banks send EMI statements, payment receipts and important notices by post and SMS. If you moved cities for your job, update your address and mobile number with the branch before repayment starts. Undelivered statements are a surprisingly common cause of missed EMIs.