When it comes to funding higher education abroad, many students turn to overseas education loans to fulfill their dreams. One of the most crucial aspects of these loans is the moratorium period, which plays a significant role in the repayment process.

The moratorium period refers to a specified duration, for most of the nationalized banks you don’t have to pay simple interest. Whereas for NBFCs and public banks borrowers have to pay simple or partial interest during the moratorium period. It typically begins after the completion of the student’s course or program and serves as a buffer period before the start of loan repayment.

Let us delve into what the moratorium period entails and its importance for students seeking financial assistance. So, stay glued.

Significance of the Moratorium Period

The moratorium period holds significant importance for both students and lenders in the context of education loans for abroad studies.

    • Academic Focus

      The primary purpose of pursuing higher education abroad is academic advancement. The moratorium period enables students to concentrate solely on their studies without the added stress of loan repayments. This undisturbed focus contributes to better academic performance and overall success in their educational endeavors.


    • Financial Stability

      Moving to a new country for education involves various expenses, including tuition fees, accommodation, and living costs. The moratorium period provides students with time to adjust to their new financial circumstances, manage their expenses, and build a financial cushion for the future. This stability is essential for borrowers to meet their loan obligations comfortably once the repayment phase commences.


    • Career Establishment

      Upon completing their studies, students often face the challenge of securing employment in a foreign country. The moratorium period allows graduates to explore job opportunities, and undergo training, or internships to enhance their employability. This period of professional development is crucial for establishing a stable source of income before loan repayment begins.

      Numerous students are confused between the moratorium period and the grace period. Don’t worry, let us move ahead and understand the difference.

Is Moratorium Period and Grace Period Synonymous?

The terms “moratorium period” and “grace period” are often used interchangeably, but they have distinct meanings in the context of loans.

    • Moratorium Period

      The term moratorium period refers to a set amount of time during which you are exempt from paying simple interest to the majority of nationalized banks. However, the borrowers of public banks and NBFCs need to pay simple or partial interest. This period usually begins after a significant event, such as completing a course of study, and serves as a transitional phase before loan repayment commences. During the moratorium period, borrowers have the opportunity to focus on their academic or professional pursuits without the immediate financial burden of loan payments.


    • Grace Period 

      On the other hand, a grace period typically refers to a specified period after the due date for a loan payment during which borrowers are given additional time to make the payment without incurring late fees or penalties. Grace periods are commonly provided by lenders as a courtesy to borrowers to allow for unforeseen circumstances or delays in payment.

      While both the moratorium period and grace period offer temporary relief from loan obligations, they differ in their timing and purpose. The moratorium period occurs before loan repayment begins, allowing borrowers to prepare for repayment, whereas the grace period occurs after the due date for a loan payment, providing borrowers with a brief extension to make the payment without consequences.

Summing Up

Understanding the moratorium period’s implications, including interest accrual and repayment planning, is crucial for managing loan obligations effectively post-graduation. By seeking guidance from top overseas education loan advisors who provide detailed information, including popular financial lenders and documents required for study loan in Canada, the UK, the US, or other countries, students can steer loan processing seamlessly. Good luck!