Many students rely on education loans to chase their dreams. But what about the moratorium period? Should you use it? Let's break down the pros and cons.
Written by - Prathyush Gupta Designed by- Prince Kumar
Photo Credit: Pexels
What is a Moratorium Period? Think of it as a pause button on loan repayments. During this time (usually course duration + 6 months to 1 year after), you focus on studies without worrying about EMIs.
Pros The moratorium offers temporary relief from EMIs, reducing your financial stress and allowing you to concentrate on academics. Photo Credit: Pexels
Cons But be warned! Interest gets added to the principal amount during the moratorium. This can significantly increase your total loan burden later. Photo Credit: Pexels
Simple vs Compound Interest Simple interest is better than compound interest. Not all lenders offer simple interest during the moratorium. So check carefully. Photo Credit: Pexels
How to get Interest Subsidy? The government's Central Sector Interest Subsidy Scheme (CSIS) can be a lifesaver! It subsidizes interest during the moratorium for eligible students. Photo Credit: Pexels
Students from families with annual income up to Rs 4.5 lakh can avail CSIS for domestic study programs (up to Rs 10 lakh loan). Photo Credit: Pexels
But If you don't qualify for CSIS, consider paying at least the interest amount during the moratorium to avoid a bigger burden later. Photo Credit: Pexels
Is Moratorium right for me? Understand your loan terms, interest calculation, and eligibility for subsidies before using the moratorium. Photo Credit: Pexels
This exercise is for informational purpose only, Banks can provide the most accurate details on loan schemes, moratorium, and CSIS eligibility. Photo Credit: Pexels
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