Are you planning to pursue a bachelor’s degree but do not have the finances to fund your education?
If so, taking a study loan in Singapore is one of the most practical solutions that you can consider.
In Singapore, various banks and financial institutions provide loans specifically designed for higher education needs.
Today we will discuss how does a study loan work in Singapore and how you can get one to achieve your academic goals.
What Is A Study Loan?
A study loan is a financing option offered by banks and financial institutions, often in association with educational institutions, to students who wish to pursue higher education.
Most of these loans allow you to borrow the necessary funds required for major education purposes, such as your tuition fees.
Generally, study loans come with lower interest rates and repayment terms than other types of loans, making them a more affordable option for students.
Let’s look at some study loan options in Singapore.
- CPF Education Loan
- MOE Tuition Fee Loan
- Bank Loans
How Does The CPF Education Loan Repayment Work?
Offered by the Central Provident Fund Board (CPFB), the CPF Education Loan is the cheapest and most commonly used Singapore study loan.
It is actually an education scheme that allows students to use their parent’s CPF savings to pay up to 100% of their course fees.
Students have to start loan repayment at a 2.5% interest rate one year after their graduation or termination of studies, whichever happens first. In any case, the board will notify the students about the commencement of the repayment period three months in advance.
However, students can also start repayment earlier by getting in touch with CPFB through their online Mailbox.
When it comes to repayment, students can either opt for monthly instalments spanning 12 years or pay back the complete loan amount in a single lump sum amount. In the case of monthly payments, the total loan amount and repayment duration will decide the monthly instalment rate.
Important: Students aren’t allowed to use their own CPF savings for CPF education loan repayment.
Eligibility Criteria For CPF Education Scheme
Students have to fulfil the following eligibility criteria:
1. They must be Singapore nationals.
2. They must be studying at one of the following institutions:
NTU, NUS, SMU, SIT, SUTD, SUSS, NAFA, Lasalle or institutions under the Polytechnic-Foreign Specialised Institution (“Poly-FSI”) Framework.
3. Students enrolled in diplomas or part-time courses aren’t eligible for CPF Education Scheme.
What Is The MOE Tuition Fee Loan?
The MOE (Ministry of Education) Tuition Fee Loan is a government-backed loan offered to Singapore citizens and permanent residents who wish to pursue higher education in a local university or institute of higher learning.
This loan covers up to 90% of your tuition fee, and it is open to local public university students except for NAFA and Lasalle.
The best thing about this loan is that you won’t be charged any interest while studying. Moreover, the repayment period starts within two years of graduation.
This is why it is recommended that you start repaying this loan while studying, so you will have to deal with a much lower amount than what you initially owed.
Education Loans From Banks Or FIs
If you fail to qualify for CPF or MOE loans, you can opt for a bank or financial institution loan.
These are often more flexible than the CPF Education Loan or MOE Tuition Fee Loan and are tailored to suit the needs of individual borrowers.
But remember, bank loans usually come with higher interest rates than the other two options. These are some of the best bank education loans in Singapore:
|Bank Loan||Interest Rate|
|OCBC Frank Education Loan||4.5% p.a.|
|RHB Monthly Rest Education Loan||4.78% p.a.|
|Maybank Monthly Rest Education Loan||4.78% p.a.|
|POSB Further Study Assist Loan||4.38% p.a|
|CIMB Monthly Rest Education Loan||5.39% p.a.|
However, banks have different requirements as compared to CPF and MOE loans. Some of the requirements are:
- You must be at least 21 years of age to apply.
- If you’re younger, you would need a sponsor or guarantor as a co-applicant in your loan application. (Some banks might have maximum age restrictions on co-applicants too. The age is usually 60 or 65.)
- Banks also have minimum income requirements for your guarantor and might ask for an annual income of $12,000 to $30,000.
Also, remember that your total bank loan amount might vary depending on your guarantor’s annual income.
So, these are the education/study loans for students in Singapore.
But how do you decide which one suits you best? Let’s find out.
What To Consider When Taking Out A Study Loan
When taking out a study loan, you should consider the following:
1. Loan Amount
The loan amount you are eligible for will determine how much of your tuition fees you can cover. If a loan can’t cover all of your tuition fees, it means you’ll have to look for other sources of funding.
2. Interest Rate And Processing Fee
You should compare different loan offers to find the one with the lowest interest rate and processing fee.
Also, some loans start charging interest while you’re studying, while others start after you’ve graduated. That makes a difference, and you should definitely keep that in mind.
3. Loan Tenure
The loan tenure should be long enough for you to pay back comfortably while being short enough to reduce your overall interest payments. Some loans give you as much as ten years to repay, while others give you as little as 12 months.
See what suits you best.
4. Repayment Structure
Lastly, you should consider the repayment structure of each loan. Some loans have fixed monthly instalments, while others allow you to choose a variable repayment structure.
Similarly, some loans charge you interest during studying, while others give you a year after graduation. Make sure to pick the one that’s most suitable for your situation.
Choose A Flexible Loan Option
It can be quite challenging to wrap your head around study loans because of their strict eligibility requirements and repayment structure.
That is where study loans from licensed money lenders can come in handy. They’re fast, flexible, and come with lenient requirements.
Still, It’s best to take your time to understand your options, so you can make an informed decision.
Need clarity? Speak to a financial advisor or loan specialist at Lending Bee for more detailed advice.
Our experienced advisors will help you apply for a loan that’s right for you.
About Ashley Sim
Calling herself a “professional multi-tasker”, Ashley worked as a relationship manager in a bank for five years. She left her job just before the pandemic happened and became a freelance writer for about a year. Now, she’s making the most of her love for writing and knowledge of the banking and financial industry in her role as a content marketing lead. She hopes to help people make better financial decisions through her content and campaigns.