Understanding the education loan moratorium period
A moratorium (repayment holiday) allows students to defer principal repayments during their course duration plus an additional grace period (typically 6 to 12 months after graduation).
During this period, simple interest usually accrues on disbursed amounts. Depending on lender policy, this interest may be paid monthly or capitalized into the principal when formal EMI repayments commence.
Worked example
Suppose you borrow £30,000 at 9.0% annual interest with a 2-year (24-month) study moratorium followed by an 8-year repayment tenure.
During the 2-year moratorium, simple interest of £5,400 accumulates. If capitalized, your repayment begins on a new balance of £35,400, resulting in a monthly payment of approximately £519.80.
Paying the interest monthly during study saves £1,500+ in downstream compounding costs.
Inputs for the moratorium loan calculator
Original loan amount
The total tuition and living costs borrowed.
Annual interest rate
The interest rate charged during study and repayment.
Moratorium duration
Total months of study plus post-course grace period.
Repayment term
Tenure in years once monthly repayments commence.
CALCULATOR QUESTIONS
Education loan calculator with moratorium period questions
Is interest charged during the moratorium period?
Yes, in virtually all commercial education loans, interest accrues from the date funds are disbursed.
Should I pay interest during study?
If financially possible, servicing the interest during study prevents capitalization and lowers your monthly payments after graduation.