Higher education can unlock doors to rewarding and lucrative careers. However, diploma and tertiary-level course fees are getting increasingly hefty even with government subsidy. In Singapore, a full-time, subsidised undergraduate degree may cost anywhere from S$24,500 to S$35,000, while an overseas degree can cost upwards of S$100,000. You may pick up a part-time job to finance your education, but juggling work and studies at the same time can be very taxing.
Study loans can help take the financial commitments off your mind and focus on your studies. Learn more about education loans in Singapore and compare your options in our guide.
Education loans are designed to be affordable and help widen your financial limits to pursue a quality education. As such, they generally come with flexible repayment structure and lower interest rates compared to those for personal loans.
One important thing to note about education loans is that the funds are strictly for paying tuition fees, unless stated otherwise. This means that if you need to spend on other necessities and coursework materials, such as textbooks, laptop or art supplies, you’ll need to find another financing option for those.
You’ll need to:
- Be at least 21 years old. If you’re below 21, you’ll need a parent (or legal guardian, but some banks do not allow it), spouse or sibling as a co-applicant.
- Meet a minimum annual income to apply for an education loan without a guarantor.
As a student, you’re most likely unable to meet the income requirement so your co-applicant must be able to meet the criteria. If your co-applicant is unable to do so, you can also apply with two co-applicants (e.g. both working parents) to make up for the income shortfall.
Before you look into taking up an education loan from banks, find out if you’re eligible for the CPF Education Scheme or MOE Tuition Fee Loan. If you’re a Singaporean or PR doing a diploma or degree in local institutions, you’re most likely eligible for these two loan types. as long as you’re a Singaporean or PR doing a diploma or degree in local institutions.
1. CPF Education Scheme
The CPF Education Scheme allows you to utilise your parents’ or spouses’ Ordinary Account (OA) savings to pay for up to 100% of your approved course fees.
Repayment for the withdrawn amount plus interest into the payer’s OA have to be made in cash (not debited from your CPF) and will begin one year after you graduate or leaves the institution. The interest rate is pegged to the CPF OA interest rate, which is at 3.5% at the time of writing (27 February 2020) and is lower than most education loans offered by banks.
To be eligible for the CPF Education Scheme, you’d need to meet the following criteria:
- Enrolment in local institutions (NTU, NUS, SMU, SIT, SUTD, SUSS, NAFA, Lasalle, Institutions under the Polytechnic-Foreign Specialised Institution (“Poly-FSI”) Framework.
- Full-time subsidised courses
2. MOE Tuition Fee Loan
The MOE Tuition Fee Loan is offered by the Singapore government to help students who require assistance to pay the tuition fees. This loan is available to all students in polytechnics and autonomous universities (excluding those enrolled in NAFA and Lasalle).
It covers up to 75% subsidised fees payable by polytechnic students, and up to 90% of the subsidised Singapore Citizen fees payable by university students. In addition, you’ll not be charged any interest while you are still studying.
3. Bank loans
If you don’t qualify for either the CPF Loan Scheme or MOE Tuition Fee Loan, your next best option is to take up a loan from the banks.
To take out an education loan from banks, you’d need to be at least 21 years old. If you’re below than 21, you’ll need a guarantor, co-applicant or sponsor who is of age and meets the minimum income requirement, which typically ranges from $12,000 to $30,000.
The amount you’re allowed to borrow is also dependable on your guarantor’s income. If he/she is unable to meet the income criteria individually, you can also apply with two guarantors to quality with their combined income.
Select ‘Compare’ in the comparison table to view each lender’s eligibility requirements.
All figures have been calculated based on a $30,000 loan over 5 years.
Rates are accurate at the time of writing (25 August 2020) and are subject to change.
|POSB Further Study Assist Loan||4.38% p.a.||2.5%||$558||More|
|OCBC Frank Education Loan||4.5% p.a||2.5%||$559||More|
|Maybank Monthly Rest Education Loan||4.45% p.a||2%||$559||More|
|RHB Monthly Rest Education Loan||4.78% p.a.||2%||$563||More|
|CIMB Monthly Rest Education Loan||4.78% p.a.||2%||$563||More|
Before you apply for any education loan, it’s important to factor these into your comparison to ensure you choose the most competitive one for you:
- Loan quantum. Check that the minimum and maximum amount of money that you can borrow enable you to take out the sum you need. Keep in mind that the amount you’re actually approved for will depend on the criteria set by the lender and your ability to repay the loan.
- Tenure. The maximum loan tenure typically ranges from 8 to 10 years, while the minimum is usually a year.
- Interest rate. Currently, the interest rate for an education loan range between o% to 6.5%. The lower the interest rate, the more affordable the loan is. If you opt for an interest-only loan, know that the interest rate charged by the bank when you’ve graduated can differ from the one you’re charged while you’re still studying. In most cases, interest-only loans will cost you more than monthly-rest loans.
- Repayment schedule. The two main repayment schedules that you can opt for are monthly rest loans and interest-only loans. Monthly rest loan charges a lower interest rate and requires you to begin making loan or at least interest repayments while you’re still in school. On the other hand, interest-only loans impose a higher interest rate, but only require you to make repayments after you’ve completed your course.
- Prepayment penalty. If you have the means to pay off your entire education loan upon graduation, most providers will allow you to do so but impose an early settlement fee of at least 1%. So if there’s a likelihood that you’d pay off the loan early, make sure to compare this as well.
- Miscellaneous fees. Expect a processing fee of about 2% or more. Do take note of other charges that may be incurred such as cancellation and late payment fees.
Benefits and drawbacks to consider
- Chance to attain higher education. Instead of passing up the opportunity to achieve the degree of your choice due to cost, education loans can help you bridge the monetary gap between your financial situation and the course fees.
- Repayment flexibility. Most education loans offer flexible features to help you to better manage your loan, such as no required payments while you’re still studying, or for the first year after graduation. This way, you’ll have ample time to seek employment before having to repay the loan.
- Credit score building. An education loan tends to be the first loan in your adulthood. So if you can pay it off on time without any defaults, it’ll be easier to get approvals for other financial products such as mortgage and car loan in future.
- Limited loan purpose. The money from the loan is solely reserved for course fees unless otherwise stated, so you’ll not be able to utilise it for other school essentials or everyday allowance.
- Burden of debt. If you’re unable to find a job immediately after graduation, your monthly loan repayments may risk putting you into a cycle of debt.
- Opportunity cost. As you set aside a sum every month to repay your study loan, you may also have to put off other life goals or investment opportunities.
The eligibility criteria may vary between providers, but you’re typically expected to meet the following:
- Singapore citizen or permanent resident
- Between 17 to 65 years of age (upon loan maturity)
- Minimum annual income of S$18,000 and above for applicant; or $24,000 for guarantor
- Enrolled in any of the approved courses and institutions specified by the lender
While education loans can offer you a way to access financing for your dream course, you should consider your goals, financial circumstances and ability to afford the loan before applying. A loan is a serious and long-term expense to take on, so make sure to delve deep in your comparison on the available options before deciding.