1. Know How Much You Need to Borrow
Start by calculating the total amount you’ll need. This should cover your tuition fees, living expenses, books, and any other costs related to your education. Having a clear picture of your expenses will give you a solid base for the rest of the calculations.2. Understand the Interest Rate
The interest rate is the extra amount you’ll pay to the lender for borrowing the money. It varies based on the bank and your loan type, and a higher rate means you’ll end up paying more over time. So, it’s important to shop around and find the best rate for your situation.3. Know Your Loan Tenure
Your loan tenure is the length of time you’ll be repaying the loan. While a longer tenure means lower monthly payments, it can also mean you’ll pay more interest overall. Finding the right balance between manageable monthly payments and the total cost of the loan is key.4. Work Out Your Monthly EMI
Your EMI (Equated Monthly Installment) is the fixed amount you’ll pay every month. It depends on the loan amount, interest rate, and tenure. You don’t have to do the math yourself—online EMI calculators can give you a quick and accurate figure in no time.5. Total Repayment and Interest
Once you know your EMI, you can calculate the total amount you’ll repay by multiplying your EMI by the number of months in your loan tenure. Subtract your original loan amount from this total to figure out how much interest you'll pay over the course of the loan.6. Consider Paying Off Early
If you can afford it, paying off your loan early can save you a lot of interest. However, be mindful that some lenders charge fees for early repayment, so it's a good idea to check with them before making any extra payments.By following these simple steps, you can get a clear idea of what your education loan will cost and better plan your finances.
Have a clearer view of the numbers involved in your education loan cost by using our EMI calculator.
Also, explore our MBA Education Loan with flexible tenure options to suit your financial goals and repayment capacity.
Why Propelld?
The following are the primary benefits of Propelld.| Particulars | Details |
| Max Loan Amount | 50 Lakhs |
| Collateral | Not Required |
| Moratorium | Available |
| Processing Time | 10 Times Faster than Banks |
| Disbursal Time | 7 Days |
| Approval Rate | Higher than Other Banks |
| Special USP | Marks Based Approval |
| % Financed | 100% of Fees |
FAQS on How to Calculate the Total Cost of Your Education Loan
- What is the total cost of an education loan?
The total cost of an education loan includes the principal amount you borrow plus the interest charged by the lender over the loan's tenure. The longer the tenure or the higher the interest rate, the more you'll end up paying. - How is the interest rate calculated for an education loan?
The interest rate is typically calculated annually by the bank or financial institution, based on factors like the loan amount, your credit score, and the type of loan you choose. It’s usually added to the principal amount and paid off over the tenure of the loan. - How does loan tenure affect the total cost of the loan?
A longer loan tenure generally lowers your monthly EMI, but it increases the total interest you’ll pay over the life of the loan. It’s important to find a balance between monthly payments you can afford and minimizing the interest paid. - How can I calculate my monthly EMI?
You can calculate your EMI by using an online EMI calculator or manually using a formula that takes into account the loan amount, interest rate, and tenure. However, most banks and financial institutions offer easy-to-use calculators on their websites. - Can I reduce the total cost of my education loan?
Yes, you can reduce the total cost by opting for a shorter tenure (which will increase your EMI but reduce the overall interest paid) or by making additional payments towards the principal during your repayment period. - Are there any hidden costs in education loans?
While most education loans have transparent terms, it’s always good to check for processing fees, late payment penalties, or other administrative charges. These can add to your total loan cost if not factored in upfront. - What is the EMI moratorium period?
The moratorium period is the time during which you don't have to pay EMIs—typically while you’re still studying and for some time after graduation until you find a job. However, interest usually continues to accrue during this period. - How do I know if my loan is affordable?
A good way to check if your loan is affordable is by calculating your monthly EMI and ensuring that it fits comfortably within your budget. Online calculators can also help you test different loan amounts and tenures to see what works for your finances. - Is it better to pay off the loan early?
If your lender allows prepayment without penalty, paying off the loan early can save you a significant amount in interest. Just ensure you have sufficient funds to manage your expenses before making extra payments. - What factors affect the total cost of an education loan?
The total cost of an education loan is influenced by the loan amount, interest rate, loan tenure, and any additional fees. These all contribute to your monthly EMI and the total repayment amount, so it's crucial to consider all these when calculating the cost. - Is there any way to lower the interest rate on my education loan?
Yes, some lenders offer discounts on interest rates if you have a strong academic record, a co-borrower with a good credit score, or if you apply for a loan under specific government schemes. It's worth checking with your bank for any such offers. - 3. What is the best way to calculate the cost if I have multiple education loans?
If you have multiple loans, you can calculate the total cost by adding up the loan amounts, interest rates, and EMIs. To simplify the process, you can use a loan consolidation option where all loans are combined, and the lender offers a single EMI with a new interest rate. - How do I know if the loan amount I’m borrowing is enough?
To determine if your loan amount is sufficient, list out your educational expenses (tuition, living costs, books, etc.) and compare them with the loan amount. Ensure that the amount you borrow covers all these costs without excessive borrowing. - What is the impact of repaying my loan early?
Paying off your education loan early can reduce the total interest you pay over time. When you make early payments, the outstanding principal decreases faster, lowering the interest charged. However, make sure to check with your lender about prepayment penalties or conditions. - How do I calculate the total interest payable on my loan?
To calculate the total interest on your loan, subtract the principal amount from the total repayment amount (EMI × number of months). This will give you the interest charged by the bank over the course of your loan. - Can I change the tenure of my loan if I’m facing financial difficulties?
Many banks allow you to extend the tenure of your education loan, which will reduce your monthly EMI. However, this can increase the overall cost of the loan, as you’ll be paying interest for a longer period. It’s essential to assess whether this is the right option for you. - Do education loan repayment terms vary across lenders?
Yes, different lenders offer different repayment terms, such as the length of the moratorium period, the interest rates, and the types of repayment options available (e.g., regular EMI, flexible repayment). Always compare terms from multiple lenders before committing to a loan. - How do subsidies affect the total cost of the loan?
Government education loan schemes like the Central Sector Interest Subsidy Scheme (CSIS) can reduce your interest burden during the study period. These subsidies lower the total cost of your loan, making it more affordable over time. - What happens if I miss an EMI payment?
Missing an EMI payment can result in late fees, penalties, and even affect your credit score. It’s important to set reminders for due dates and, if you’re unable to make a payment, reach out to your bank to discuss options such as rescheduling or restructuring your loan. - How can I estimate the overall cost of my education loan before applying?
Before applying, you can use online EMI calculators to estimate your monthly EMI, total repayment amount, and the interest you’ll pay based on your loan amount, interest rate, and tenure. This will give you a clear picture of how much the loan will cost in the long run. - Is it better to apply for a loan with a lower EMI or shorter tenure?
If you can afford the higher EMI, choosing a shorter tenure is usually better as it will result in paying less interest overall. However, if affordability is a concern, extending the tenure can help reduce the EMI, though it might lead to higher total repayment costs.