At 10% a year over 7 years, every ₹1 lakh of education loan costs about ₹1,660 a month in EMI. A ₹10 lakh loan is roughly ₹16,600 a month, and ₹20 lakh is roughly ₹33,200. Interest left unpaid during the course is usually added to the loan, so the real EMI can be 30% or more higher.
The EMI formula
EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate divided by 12) and n is the number of monthly instalments. A 7-year repayment means n = 84.
We use 10% a year as a planning figure. In mid-October 2026, SBI's Student Loan Scheme was listed at about 9.65% to 10.15% (with a 0.50% concession for girl students and lower Scholar Loan rates at select premier institutes), while private banks and NBFCs often charge more. Rates are linked to the bank's benchmark and change with the RBI repo rate, so check the SBI education loan rate page or your own bank on the day you apply.
EMI table (10%, 7-year repayment)
| Loan amount | Monthly EMI | Total repaid over 7 years |
|---|---|---|
| ₹5 lakh | about ₹8,300 | about ₹7.0 lakh |
| ₹10 lakh | about ₹16,600 | about ₹13.9 lakh |
| ₹15 lakh | about ₹24,900 | about ₹20.9 lakh |
| ₹20 lakh | about ₹33,200 | about ₹27.9 lakh |
| ₹25 lakh | about ₹41,500 | about ₹34.9 lakh |
| ₹30 lakh | about ₹49,800 | about ₹41.8 lakh |
| ₹50 lakh | about ₹83,000 | about ₹69.7 lakh |
| ₹75 lakh | about ₹1,24,500 | about ₹1.05 crore |
Source: standard reducing-balance EMI at 10% a year over 84 months, on the amount outstanding when repayment starts. Indicative only; your bank's rate and terms decide the actual figure.
Interest during the course and moratorium
Banks usually give a repayment holiday of the course period plus about 12 months. Interest still runs during this time, generally as simple interest, and if you don't pay it, the bank adds it to the loan when EMIs begin. On a loan disbursed year by year over a 4-year course at 10%, this can add roughly 30% to 35% to the amount you repay EMIs on; if the whole amount is disbursed upfront, closer to 50%. Paying even part of the interest while your child is studying keeps the EMI down.
Take-home vs EMI stress test
Assuming take-home pay is about 70% of gross salary:
Bars show the EMI (10%, 7 years) as a share of estimated monthly take-home pay. Illustrative figures, before any interest added during the moratorium.
Anything above about 40% of take-home leaves very little for rent, food and savings in a first job.
Safe loan-to-salary ratio
A common rule is to keep the EMI under 30% of take-home pay, with 40% as a stretch. At 10% over 7 years, that works out to:
| Expected first-year salary | Safe loan (EMI ≤ 30%) | Stretch loan (EMI ≤ 40%) |
|---|---|---|
| ₹4 LPA | about ₹4 lakh | about ₹5.5 lakh |
| ₹10 LPA | about ₹10.5 lakh | about ₹14 lakh |
| ₹15 LPA | about ₹16 lakh | about ₹21 lakh |
| ₹25 LPA | about ₹26 lakh | about ₹35 lakh |
Use the median placement figure for your college and branch, not the highest package on the banner.
Choosing a lender
For smaller loans, public sector banks are usually the cheapest. SBI's Student Loan Scheme needs no collateral up to ₹7.5 lakh; above that, collateral is required. Scholar loans with lower rates apply only to institutes on the bank's list. The government's PM-Vidyalaxmi scheme supports collateral-free, guarantor-free loans for students admitted on merit to listed quality institutions, with 3% interest subvention on loans up to ₹10 lakh for families earning up to ₹8 lakh a year. For larger amounts, families often combine a bank loan with an NBFC such as HDFC Credila or Avanse, which typically charge more. Our education loan comparison goes into the details.
Prepaying the loan
Put any spare salary towards the loan in the first three years, when interest is the biggest part of each EMI. Under the RBI's prepayment directions, banks and NBFCs cannot charge a prepayment penalty on floating-rate loans taken by individuals for non-business purposes (for loans sanctioned or renewed from 1 January 2026), which covers most education loans. Check the sanction letter if your loan is on a fixed rate.
Tax relief on interest
The interest you pay, with no upper limit, can be deducted from taxable income for the year interest payments start and the seven years after, but only under the old tax regime. Principal repayments don't count. This was Section 80E of the Income-tax Act, 1961 and is now Section 129 of the Income-tax Act, 2025. Whoever took the loan, a parent or the student once earning, claims it.