Education Loan Options in Singapore

To anyone who aims to pursue their career goals, good quality education is definitely vital. However, over the years, entering college has been more inaccessible because it was deemed expensive. 

As one of the most well-developed cities in the world, it’s likely for tuition fees in Singapore to stretch nearly up to S$30,000. And in many cases, finding and securing the ideal education loan Singapore is essential to keep in mind.

Here are some options to consider when finding the best education loan in Singapore:

  • Government Education Loan: Ministry of Education Study Loan

A study loan or education loan is money borrowed from the government or a private lender in order to pay for education. This grant can usually be used for tuition, food and board accommodation, books, medical insurance, transport, visa applications and other utilities.

Eligibility: Students who have taken up a maximum of the Tuition Fee Loan, and with gross monthly per capita income of $2,700 or less, can avail the Study Loan to finance their remaining fees. This plan is tenable for the entire course duration. 

Coverage: This covers up to 25% of subsidised fees payable and a living allowance loan of $2,000 per year for polytechnic students. It also offers up to 10% of the subsidised Singapore Citizen fees payable and a living allowance loan of $3,600 per year for university students.

According to the Ministry of Education, for those with monthly household per capita income of $950 or less, the loan is interest-free. Meanwhile, for students with monthly household per capita income between $951 and $2,700, the loan is only interest-free during the course of study, with interest-only commencing upon graduation.

Loan tenure: It can also be noted that for interest-bearing study loans, the maximum loan repayment period is up to 5 years for loans taken at polytechnic level, and nearly up to 20 years for loans taken at the university level. 

For interest-free study loans, the maximum loan repayment period is up to 2 years for loans taken at the polytechnic level, and up to 5 years for loans taken at the university level.

  • Banks

This could be a better option should you have been declined for a MOE Tuition Fee Loan. The following listed are currently some of the best deals in Singapore.

 

Education loan in Singapore Interest rate p.a. Processing fee p.a.
DBS Study Loan 4.38%  2.5%
POSB Further Study Assist Loan 4.38% 2.5%
OCBC Frank Education Loan 4.5% 2.5%
Maybank Monthly Rest Education Loan (Local) 4.45% 2%
Maybank Monthly Rest Education Loan (Overseas) 4.45% 1.5%

 

*As of January 2021

Charges and Fees

Additional fees are usually separate from the interests. This may vary under rights reserved by individual banks themselves. 

As banks charge a processing fee of 2% of the loan that will be deducted upfront from loan amount upon the first disbursement. Here are other fees and charges for education loan:

  • The processing fee of 2% of the loan. It will be deducted upfront from loan proceeds upon first loan disbursement.
  • Full Prepayment penalty of 1% on the original loan.
  • Partial Prepayment penalty of 1% on the prepaid amount if the loan is pre-paid within the loan tenure. The minimum prepayment amount at any one time is S$1,000 with additional multiples of S$1,000.
  • A cancellation fee of 1% on the original loan is payable if there is a cancellation after acceptance of Letter of Offer.

Disbursement Fee: commission waiver only for Cashier’s Orders.

Eligibility

  • You must be between 21 years old and 60 years old 
  • Applicants under the age of 21 will need to have a guarantor
  • Applicants over 60 years may need to have a shorter loan tenure

Requirements

  • Filled out application form signed by the applicant and guarantor (if applicable)
  • Your letter of acceptance from the education institution
  • NRIC of both applicant and guarantor
  • Proof of the residential address
  • Proof of relationship with guarantor
  • For salaried employees: Your latest e-statement of income, or your CPF contribution history for the last 12 months, or your latest Income Tax Notice of Assessment
  • For those self-employed: Your latest 2 years of Income Tax Notices of Assessment
  • Moneylenders

Availing a personal loan from licensed moneylenders  can help supplement a budget for the student’s education. 

Moneylenders’ personal loan is one of the most flexible deals in Singapore. You can easily enjoy purchasing big-ticket expenses and bills, more importantly, your student dues with its loanable amount of up to 6 times your monthly salary.

To find ease in looking for the loans that best fit your financial worries, check A1 Credit. Borrowers can get a wide selection of services from the lender including personal loans, business loans, payday loans and foreigner loans. You can get our approval within30 minutes upon online application with low-interest rates and flexible payment plans. 

To Successfully Apply for Its Deals and Get Your Money Woes Sorted Within Just a Day:

  1. Apply for your loan either via walk-in, a phone call over 6336 0833 or online via the website.
  2. If you are seeing a loan over the phone, some preliminary questions will be made to weigh your eligibility. You will then be invited to come down to the office to get to know more about the process.
  3. At the office, you are urged to ask queries and clarify doubts. You will also be required to present your documents, hopefully, for the verification. Upon analysing your case, the loan officer will then offer you an amount and enlighten the terms and conditions of the loan for an agreement and for the benefit of your understanding.
  4. Borrowers then will proceed into signing an agreement of loan amount and repayment terms. The designated loan officer will print out your contract. Rest assured this will only take a few minutes.
  5. Once your contract is signed, you will immediately receive the cash on the spot, hassle-free.

Charges and Fees

All moneylenders are only permitted to impose the following charges and expenses:

  • a fee not exceeding $60 for each month of late repayment;
  • a fee not exceeding 10% of the principal of the loan when a loan is granted; and
  • legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

In order to qualify for a loan, these are the criteria:

Eligibility

  • Should be 18 years old 
  • Earning at least $1,500 monthly for citizens and permanent residents, and $2,000 per month for foreigners.

Requirements for Local and Permanent Residents

  1. Identity Card or NRIC
  2. Proof of Residence (utility bill, a letter addressed to you and/or tenancy agreement)
  3. Proof of Employment (a certificated of employment or three months recent computerised payslip)
  4. SingPass (for logging into CPF, HDB or IRAS

Requirements for Foreigners

  1. Passport
  2. A working permit or S-Pass or Employment Pass
  3. Proof of Employment (a certificated of employment or three months recent computerised payslip)
  4. Proof of income (bank or account statement)
  5. Proof of Residence (utility bill, a letter addressed to you and/or tenancy agreement)
  6. SingPass (for logging into CPF, HDB or IRAS)

Factors to Compare Whenever Choosing an Educational Loan

Before considering to avail a study loan, there are different factors to consider. Some of them are:

  1. Loan Quantum:

Check whether the minimum and maximum amount of money you can borrow enable you to take out the sum you need.

  1. The Interest Rate While You’re Studying Vs After You Graduate: 

While it’s a given the lower the interest rate, the cheaper the loan, it’s ideal to interest rates from time to time. Keep in mind that interest rates charged by the bank while you’re still studying may differ from what you’re charged when you’ve graduated if you opt for an interest-only loan.

  1. Tenure: 

Tenures differ depending on your bank or lender however, maximum loan tenure tends to be from 8 to 10 years, while the minimum tends to be 1 year.

  1. Repayment Schedule: 

It’s important to be aware of a borrower’s repayment period as it usually also varies per lender and bank. It’s likely it will commence no later than 6 months after graduation.

  1. Prepayment Penalty: 

It’s expected that most loans will impose a prepayment penalty if you pay off the loan early, so it will be better to compare these.

  1. Other Fees: 

Always read the existing terms and conditions so you are mindful of all the associated charges that may occur, from processing fees, pre-payment and late payment.

What If You Cannot Repay Your Education Loan?

As anything is possible, because of many contributing factors, it may not be guaranteed you can pay for your study loan. Once that happens, the bank or lender is likely to go after you and then your guarantor and try to collect the money from them.

Note that these institutions can take legal action against both you and your guarantor. As education loans are generally unsecured loans, you will not lose any collateral to the bank nonetheless.

On the other hand, assuming you have done well in the university and helped yourself in getting a decent job for a decent amount of money, you’re in good hands. You will have no issue in paying off your dues and will likely be able to repay your balance on time.

Other Strategies You Can Consider to Fund Your Studies:

  • Applying for a MOE Teaching Scholarship
  • Using your Ordinary Account savings through the CPF education scheme
  • Securing highly competitive scholarships and/or bursaries – this is the most convenient way to ease your loads. With this approach, you won’t be required to repay anything.

Students Grants – similar to scholarships of some sorts, but they are only need-based. You do not have to repay them, however, to be granted such scholarships, you need to meet some financial conditions, such as very low or no income sources.

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