Education is a crucial element to get a good job. University education, in particular, can open doors to various career paths in Singapore. Despite the importance of education, access can still be difficult for many people. Financial constraint is one of the barriers to access to a good education.
There are many kinds of financial assistance that provide students an opportunity to start or continue their studies. However, not all student loans are made equal.
The following provides specific details about student loans that you will need to determine which kind of education loan would best fit your situation.
Where to Get Study Loans?
There are several ways to get a study loan in Singapore. This includes a CPF education scheme, a MOE tuition fee loan, and a loan from commercial banks. Also, you can take a personal loan from a licensed moneylender if you fail to fulfill the requirements of banks. All are viable ways to help students continue their studies without worrying about how they can be paid during the term of their studies. Below are the details for each source of education loan.
CPF education scheme
Overview: The CPF Education scheme is a type of education loan that lets students use the CPF Ordinary Account (OA) savings to pay their, their children’s, or their spouse’s tuition fees.
The loan scheme can be used and applied for full-time subsidized courses from Approved Educational Institutions in Singapore. Applications for this loan can be made for the use of their own, their parents’, their legal guardian’s, or their spouse’s OA savings. Siblings’ and other relatives’ OA savings can also be used on a case-by-case basis.
Tuition fee coverage: It can cover the full tuition fees with repayments starting one year after graduation. The amount can be paid in a lump sum or in monthly installment over a maximum of 12 years. The loan interest is set based on the current CPF OA interest, which is a minimum of 2.5% per annum.
How to apply: To apply for an education loan through the CPF Education Scheme, students can file an application on the CPF website through My Requests. After filing an application, CPF will send an email notifying the applicants that they need to login into the website within 14 days after filing the application to approve the opening and use of their or their relatives’ savings account.
MOE tuition fee loan
Overview: Singapore’s Ministry of Education (MOE) tuition fee loan is a government education loan that can cover part of the tuition fees of students in several polytechnical and autonomous universities.
Eligible students include those who are studying full-time in polytechnics, or full-time subsidized undergraduate and post-graduate programs in autonomous universities. Singapore citizens who are studying a part-time subsidized undergraduate program in autonomous universities are also eligible.
Tuition fee coverage: The loan covers up to 75% of the tuition fee subsidy which is payable by students from polytechnic universities. It can also cover up to 90% of fees of Singapore citizens, which are payable by university students.
A guarantor is required for this type of loan. An approved loan can be used for the entire duration of the course. The loan interest does not apply during the study period. Interests only start upon graduation from the course. Repayments for this loan start no later than 2 years after graduation. The loan repayment period is up to 10 years for students who studied in polytechnics, while it is up to 20 years for those in autonomous universities.
How to apply: To apply, students can approach DBS, OCBC, and UOB. Students from Singapore Management University can inquire from the institution about the MOE loan. Note that before going to a bank, it is best that you inquire to your school or university staff first.
Best Education Loans from Top Banks
Several banks in Singapore offer an education loan at competitive interest rates, reasonable processing fees, and flexible repayment schemes. The following table shows the top 8 rates with the assumption that the loan amount is 10,000 and loan tenure is 4 years.
|Studies (local or overseas)||Interest rate||Processing fee||Repayment|
|Local Studies||4.38% interest rate (p.a.)||2.5% of the study loan amount||S$227.49|
|Local Studies||4.38% interest rate (p.a.)||2.5% of the study loan amount||S$227.49|
|Local Studies||4.5% interest rate (p.a.)||2.5% of the study loan amount||S$228.03|
|Local Studies||4.45% interest rate (p.a.)||2% of the study loan amount||S$227.81|
|Local Studies and Overseas||5.39% interest rate (p.a.)||2% of the study loan amount||S$232.06|
To be eligible for any type of education loan or study loan, banks often have specific requirements. The applicant should be a full-time diploma student who is a Singapore citizen or a permanent resident. Also, in order to be qualified, the applicant must also get a guarantor who is aged from 21 to 60 and is not an undischarged bankrupt.
Note that each academic institution has its own procedure for application. Schools and universities have their own protocols when it comes to tuition and other student fees. The best thing to do is to look for the student loan application procedure on the school website then choose which bank can provide you the necessary financial assistance you need.
Applying for a student loan from a bank can be challenging for many. The requirements banks ask for are often difficult to produce. Students should not worry, though, because there are other ways where they can borrow money to settle their school fees. Probably one of the most popular types of loans students take as an alternative is a personal loan from licensed moneylenders.
Personal Loan from a Licensed Moneylender
Before choosing an education loan, consider various factors such as the allowable, approved loan, interest rates, repayment period, and processing fees, among other things.
If you are not eligible for a CPF education loan, a MOE education loan, or a loan from a bank, you can consider applying for a personal loan to licensed moneylenders in Singapore.
One licensed moneylender in Singapore that can provide an education loan is Bugis Credit. Since 2007, Bugis Credit offers the best monthly loans, the best business loans, personal loans, and payday loans among other things, at a competitive rate with flexible repayment. With the personal loan, you can loan up to six times your monthly income.
- It has fewer and easier requirements
For example, even if you do not have a good credit rating and have outstanding loans, you can still apply for a student loan. Also, it has a faster application procedure compared to banks. Bugis Credit Pte. Ltd. and many other licensed moneylenders can approve loans in just a few hours or even less.
- Is a short-term loan
Which means that you can get a shorter repayment period instead of spending several years before you can pay off your debt. Most licensed moneylenders would lend money in less than a year. If you choose to extend your loan, you can always ask the moneylender for a loan extension. You just have to pay the necessary fees and interest rate charges to do this.
- High-interest rate
While banks only charge 4% to 6% per year for a student loan, moneylenders would charge up to 4% per month, which is around 30% to 40% per year. For some, this interest rate is simply too high. Students often choose this as a last resort if they find it difficult to pay their school fees and fail to secure an education loan.
- Includes a processing fee of not more than 10% of the amount of the study loan
Also, borrowers will have to pay a fee of not more than $60 for each month of late repayment. If you wish to know more about the rules and guidelines when it comes to borrowing from licensed moneylenders, you can check the Ministry of Law’s site here.
Which Education Loan Should You Choose?
As indicated above, there are multiple ways on how to get a student loan. Aside from getting it from banks, you can also take a personal loan from licensed moneylenders in Singapore. However, you decide, you have to consider several factors, including the following:
1. The loan amount you need
Schools have different tuition fee rates. You have to make sure that the education loan you are applying for is enough to cover the cost of your study. Note that aside from your tuition fee, you also need money for books, board, lodging, and other miscellaneous expenses.
2. The loan tenure
When applying for an education loan, you must also take into consideration the length of time you need to pay for it. Many borrowers would choose to take shorter loan tenure to make sure that it doesn’t take too long for them to settle their debt. Meanwhile, others want to take longer loan tenure when applying for study loans to make sure that they are given more time to pay for what they owe.
3. The repayment schedule
Aside from the loan tenure, you must also pay attention to when you need to pay for the education loan. Ask yourself when you can have a stable monthly income to pay the monthly fees for your loan. Are 5 years enough for you to start paying your education loan? When assessing this, you have to carefully read the stipulations of the contract you are signing to make sure that it is ready when the time comes that you have to pay.
4. Interest rate
Needless to say, you must choose an education loan with the lowest interest rate. By doing so, you are saving a lot of money. But, you must also remember that your repayment schedule and your loan terms can change the interest rate of your loan.
There is no doubt that finishing a tertiary education is expensive. It is no surprise then that thousands of Singaporeans choose to apply for an education loan. Before taking one, it is important that you consider all the necessary factors that influence your education loan. Research about its interest rate, processing fee, loan terms, and many more.
Also, do not forget to coordinate with the staff of your university, college, or school. Oftentimes, these educational institutions have their own way of settling their fees. It is best to ask them before applying for a loan from banks and other financial institutions. They will provide you details on which type of loan is best to settle your fees.
Moreover, take note that an education loan is not your only option when in need of financial assistance. Students who run short of their school fees would sometimes take a short-term personal loan from a licensed moneylender.
These moneylenders are under the supervision of the Singapore government’s Ministry of Law, which means that you are assured of their legitimacy. If you are in need of money to pay for your school fees and other needs, you can contact Bugis Credit Pte Ltd. here.