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What is a holiday/interest free/moratorium period? What if there is a break in the study?

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Unlock the mystery of moratorium: Learn its perks during study breaks for stress-free education financing.

A holiday/interest-free/moratorium period, also known as a grace period, is a specific duration during an education loan repayment period when the borrower is not required to make any principal or interest payments. This period allows the borrower to focus on their studies or to find employment before they start repaying the loan.

Moratorium Perion Explained:

The moratorium period recognizes the fact that it takes time for students to complete their studies, find employment, and stabilize their financial situation before they can begin repaying the loan. It provides a temporary relief from loan repayments during this transitional phase. While no principal or interest payments are required during the moratorium period, interest may still accrue on the loan amount. The interest that accumulates during this period is typically added to the loan balance, and the borrower starts repaying both principal and interest after the moratorium period ends.

Duration Limit:

As for duration, it can vary among lenders and depends on factors such as the course duration, employment prospects, and the borrower's preferences. It typically ranges from 6 months to 1 year after the completion of the course or until the borrower secures employment, whichever is earlier.


If there is a break in your study, such as taking a gap year or deferring your MBA program, the moratorium period may be extended to cover the duration of the break. However, this extension may be subject to the approval of the lending institution and may require proper documentation and explanation for the break.


It's important to note that even though no payments are required during the moratorium period, the interest continues to accrue on the loan amount. The repayment start date, including the commencement of principal and interest payments, is typically determined based on the completion of the moratorium period or when you secure employment, whichever comes earlier.

Consider utilizing this period to enhance your skills, build a strong network, and search for employment opportunities that align with your career goals.