Education Loan and Your CIBIL Score (2026): What the Moratorium, a Co-Borrower Parent and a Missed EMI Actually Do
By Nitish Bharadwaj · Published Sep 24, 2026 · 6 min
An education loan is reported to credit bureaus from disbursal, on the student's file and on the co-borrower parent's file, even though no EMI is due during the moratorium (usually the course period plus up to a year). Interest keeps building during the moratorium unless a scheme such as CSIS covers it. Once repayment starts, every late EMI appears as days past due on both reports, and 90 days of non-payment makes the account an NPA. Handled well, the same loan can be a student's first strong credit record.
For most Indian students, an education loan is their first credit product, and it usually appears on a parent's credit report too. Many families assume the loan stays invisible until repayment starts. It doesn't. The loan is reported to the bureaus from disbursal, the moratorium only postpones EMIs, and when repayment begins, a single missed EMI shows up on two credit files at once.
What Is Reported, and When
| Stage | Student's credit report | Co-borrower parent's report |
|---|---|---|
| Disbursal | New loan account opens, which starts the student's credit history | Same account appears as a joint or co-borrower liability |
| Moratorium (course + up to 1 year) | Account active, no EMI due, and interest usually accrues | Counted in the parent's existing obligations |
| Repayment, on time | Clean payment record every month, which builds the score | Clean record, but the EMI still counts in FOIR for the parent's own loans |
| EMI 30+ days late | Days past due recorded and score drops | Same DPD recorded and score drops |
| 90+ days unpaid | Account classified NPA | Same NPA status on the parent's file |
The moratorium usually covers the course period plus six months to a year. Under the Indian Banks' Association model scheme followed by most public sector banks, it is the course period plus one year. During this time no EMI is due, so nothing can be missed, but the account is live on both reports. For the parent, the loan amount counts as an existing liability when they apply for their own home or car loan.
Interest Keeps Building During the Moratorium
Most lenders charge simple interest during the moratorium and add it to the principal when repayment starts. That makes the first EMI larger than many families expect. Paying the interest while the student is still studying keeps the outstanding amount from growing, and some banks offer a small rate concession if you do.
Co-Borrower or Guarantor: The Parent's Exposure
Most education loans need a parent or guardian as co-borrower. A co-borrower is jointly liable from day one, and the account is reported in full on their file. A guarantor is liable only if the borrower defaults, but the default still reaches the guarantor's report, as we explain in our guide to guarantor defaults. Either way, the parent's score depends on whether the student repays on time after graduating.
This matters most when the parent plans to borrow again, for a home loan near retirement or to fund a second child's studies. Lenders look at both the score and the existing EMI burden, so a large education loan that is still in its moratorium can lower the parent's eligibility even while everything is on time.
What a Missed EMI Does
Once repayment begins, the loan works like any other term loan. A payment more than 30 days late is recorded as days past due and marks both reports. If the loan is unpaid for 90 days, the lender classifies it as a non-performing asset. After that, recovery action, a settlement or a write-off can follow, and each of these leaves a lasting remark on both files. A written-off or settled education loan can make it hard for a young graduate to get a first credit card or car loan for years.
Turning the Loan Into a Credit Advantage
- Set up auto-debit for the EMI from the graduate's salary account in the first month of repayment
- Pay moratorium interest if the family can afford it, to keep the principal from growing
- Check both the student's and the parent's credit reports once a year, and make sure the moratorium isn't wrongly shown as overdue
- Claim the full interest deduction under Section 80E (old regime only) for up to eight years from the year repayment starts
- Once the loan is closed, get a no-dues certificate and confirm both reports show the account as closed
Repaid on time, an education loan gives a graduate several years of clean history on a secured-style term loan. That kind of record helps later applications for a credit card or home loan go through easily.