Installments and cost, with grace-period markup.
Monthly installment
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Balance at repayment start
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Total cost
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Why the grace period quietly raises your loan
A student loan in Pakistan rarely behaves the way borrowers expect. You are told repayment starts after you graduate, so the years of study feel free. They are not. On most education financing, markup keeps accruing through that grace window even though you make no payments, and it gets added to the principal. By the time the first installment falls due, you are repaying a balance larger than the one you borrowed. This tool makes that hidden growth visible: it grows the loan at the markup rate across your grace months, then amortizes the bigger figure over the repayment tenure. It is meant for a student or a parent planning ahead, who wants to see the true installment before signing, not after.
A PKR 2 million loan, traced from disbursement to first payment
Use the defaults the calculator loads: PKR 2 million borrowed, 14% markup a year, a 24-month grace period while you study, and a 7-year repayment tenure once it ends. The markup compounds monthly through grace, so the balance grows to about PKR 2,641,974 before a single rupee is repaid. That is roughly PKR 641,974 of markup capitalized onto your principal while you were in class. Amortizing PKR 2,641,974 over 84 months at the same rate gives a monthly installment near PKR 49,511, and the total you repay across the tenure is about PKR 4,158,893. The 14% figure here is an editable example, not a fixed rate, so enter the actual markup your bank or scheme quotes.
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The three dials that change everything
Three inputs move the installment far more than the others. The markup rate is the obvious one, but the grace length and the tenure matter just as much. A longer grace period feels generous while you study, yet every extra month lets markup compound on a balance you are not paying down, so it pushes both the installment and the total cost up. The repayment tenure cuts the other way: stretching it lowers the monthly figure but increases what you pay overall, because markup runs for longer. Try shortening the grace to 12 months and watch the starting balance fall, then lengthen the tenure and watch the installment drop while the total climbs. There is no free option here, only the trade you prefer.
A tip that saves real money, and one mistake to avoid
If the lender allows it, pay the markup, or even part of it, during the grace period. Servicing the interest while you study stops it from capitalizing, so repayment starts on the original PKR 2 million rather than PKR 2.64 million, and the installment is meaningfully smaller. Even paying half the accruing markup helps. The common mistake is comparing two loan offers on their headline rate alone. A loan with a lower rate but a longer mandatory grace period can cost more than a slightly pricier loan that lets you start paying sooner. Compare on total cost, which this tool gives you, not on the rate sticker.
Is the markup on a student loan tax deductible in Pakistan?
The Income Tax Ordinance has at times allowed a deduction or tax credit for profit paid on a loan taken for higher education, subject to conditions and limits that change with the Finance Act. Whether it applies to your loan, and how much, depends on the current rules, so check the latest position with the FBR or a tax adviser before assuming relief. This calculator does not net off any tax benefit, it shows the gross cost of the loan.
What if there is no grace period at all?
Set the grace field to zero and the balance at repayment start equals the amount you borrowed, with no capitalized markup. Repayment begins immediately on PKR 2 million, the installment is lower, and the total cost is the smallest this loan can be for a given rate and tenure. That is the cheapest structure, though it assumes you can afford payments while still studying.