Blog Students Advice For Students Best Study Loans in Singapore: In-Depth Comparison

Best Study Loans in Singapore: In-Depth Comparison

Best Study Loans in Singapore: In-Depth Comparison

 

University loans, much like private tuition rates nowadays, don’t come cheap.

But it is every Singaporean parent’s dream to send their kids to university.

Higher education in Singapore can set one up for a career of your choice. After a few years of focused studies, university graduates enjoy higher income, higher job benefits and more advancement opportunities than others.

But when it comes down to financing your child’s education in Singapore, things may seem daunting. Tuition fees can cost anywhere from $20,000 to $200,000 depending on whether you want to study in any of the top schools in Singapore or abroad.

But study loans have made it possible to afford such tuition fees, even when you don’t have upfront savings.

What You Will Learn About Study Loans

1. Most affordable options to finance education in Singapore
2. Things to consider before taking a study loan
3. Eligibility requirements to acquire a study loan
4. Interest rates of different banks for study loans in Singapore
5. Free tools to calculate interest rates and installments
6. What if your child can’t get a job after school

Things to Consider When Taking an Education Loan

One should consider the following things when taking study loans in singapore:

1. Loan Amount

How much of tuition fee will be covered?

2. Interest Rate

Ranges from 0% to 6.5%

3. Tenure

How much time does your child have to pay off the loan?

4. Repayment Schedule

Are repayments flexible? Can your child pay off most of the loan after graduation?

5. Processing Fee

Up to 2% is normal.

6. Singapore University Fees

Know how much it costs to study in a Singapore University.

7. Prepayment Penalty

How much does it cost to repay the loan ahead of time?

8. Other Fees

Late payments, loan cancellation, prepayment, or other hidden fees

CPF Education Scheme: Most Affordable

If you want a low-interest study loan, you can explore the CPF Education Scheme provided in the Singapore education system. It allows you to use your CPF to pay for your child’s school tuition.

But your child has to meet the eligibility requirements.

Eligibility

Here are the three eligibility requirements for the CPF education scheme:

  • The student is applying for any of the full-time subsidised diploma/degree courses in Singapore at institutions approved by CPF board.
  • The student is using their own, their parents’, their spouse’s, siblings’ or relatives’ Ordinary Account (OA) to pay for the tuition fees.
  • The OA account has enough savings and available withdrawal limit to be used for the CPF Education Scheme.

Benefits of CPF Education Scheme

With up to 100 percent of tuition fees cover and the lowest interest rate of 2.5%, CPF education scheme is much sought-after by many students. Loan repayment starts once the student graduates or terminates their studies.

The student doesn’t need a guarantor when applying for the CPF scheme unless they’re a foreign national.

Courses For Which You Get Only Partial Funding

Parents prefer the CPF Education Scheme because it offers one of the lowest interest rates. But there are some courses for which your child cannot get a loan on 100 percent of their tuition fee:

  • The student is applying for a course in an art college. In this case, only 50 percent of the tuition fee can be withdrawn.
  • They are applying for polytechnic, a technical-engineer diploma or technical diploma in Culinary Arts at ITE. In this case, only 25 percent of the course fee can be withdrawn.
  • They are applying for a university or foreign specialised institution under the Polytechnic-Foreign Specialised Institution Framework. In this case, only 10 percent of the tuition fee can be withdrawn.

Note: The student is not eligible for the CPF education scheme if they are applying for a part-time course or diploma; or if they are not eligible for subsidised fees–such as when they have already studied for a subsidised undergrad degree or they are not a Singapore citizen.

Quick Details on CPF Education Scheme:

  • No guarantor needed
  • Up to a 100% of your child’s tuition fee can be covered
  • Easy repayment – Loan payments start one year after you graduate
  • Repayment of loan plus interest amount can be done in cash in a lump sum or over a period of twelve years
  • Interest starts building when you withdraw the loan from bank account
  • Interest is fixed at CPF ordinary account interest rate, a minimum of 2.5% p.a.

MOE Tuition Student Loan: Zero Interest During School

If your child isn’t qualified for the CPF Education Scheme, no need to worry. MOE Tuition Loan is a good alternative that allows you to borrow up to 90 percent of the tuition fees. The student pays zero interest during the time they are in college. MOE is available for local university students excluding those who study at NAFA and Losalle.

Since most study loans in Singapore charge interest during the time your child studies in college, MOE Tuition Loan is cheaper than bank loans in general.

MOE vs CPF: Official Comparison Sheet

If your child is eligible for both CPF and MOE, weigh them against each other. This is because the MOE can be cheaper when the student is able to pay off the loan in a short time after college.

If you want a comparison between CPF Education Scheme and MOE Tuition Loan, check this official comparison sheet provided by CPF.

Quick Details on MOE Tuition Loan

  • A guarantor is needed
  • MOE loan covers up to 90 percent of tuition fee
  • Repayment starts up to 2 years after graduation
  • Loan amount plus interest can be repaid in full in a lump sum or via monthly installments over a maximum period of 20 years
  • Interest is zero percent during the time of study and starts accruing once the student graduates
  • Interest is fixed as per banks’ prime lending rates

If your child doesn’t qualify for CPF or MOE loans, you need to apply for bank loans. Bank loans can be of different types:

Monthly Rest Student Loans vs. Interest Only Student Loans

Monthly rest loans require the student to pay back loan payments with interest while they’re still in school. The benefit of monthly rest loans is that they cost less in the long-term.

Interest only loans allows the student to repay only interest while in school. So your child pays the bulk of loan payments after graduation or termination of studies.

Here is an in-depth comparison of best study loans in Singapore offered by banks.

Best Study Loans in Singapore: In-Depth Comparison of Banks

Maybank Education Loan – Best For Low Income Students

Maybank Education Loan is one of the most affordable study loans in Singapore. It has a low interest rate of 4.78 percent and processing fee of 2 percent. You can avail an even lower interest rate of 4.5 percent if your child joins any of the institutions that Maybank promotes.

No matter how expensive your child’s tuition is going to be, Maybank has you covered. It offers a loan of up to S$200,000 or eight times the income of the guarantor. The loan is appealing to most students because of its lowest minimum income requirement for working students.

Interest Rate 4.50% – 4.78%
Processing Fee 2%
Tenure 1-8 Years
Loan Amount S$200,000 or 8 x Guarantor’s Monthly Income
Required Annual Income Guarantor’s $30,000
Early Repayment Fee 1% of Loan Prepaid
Late Payment Fee 3% minimum S$30
Age 18 and above

Maybank Education Loan Promotional Package

If you can apply for the study loan and get it approved before October 4th, 2019, the Maybank Education Loan Promotion can give you many benefits over their regular loan offer. The promotional offer is the cheapest for students who are looking for an affordable bank loan. The interest rate is 4.45% per annum and the processing fee is the lowest at 1.5%s. In addition to these benefits, you also get a S$100 voucher when you apply online for the offer.

Interest Rate 4.45%
Processing Fee 1.5%
Tenure 1-8 Years
Loan Amount S$200,000 or 8x Guarantor’s Monthly Income
Required Annual Income Guarantor’s $30,000
Early Repayment Fee 1% of Loan Prepaid
Late Payment Fee 3% minimum S$30
Age 18 and above

Check Official Page of Maybank Education Loan Promotion

OCBC Frank Education Loan

OCBC Frank Education Loan is the most affordable interest-only loan for students. In other words, students have to make only interest payments while they study in school and the main loan payments start only after they graduate or terminate studies. OCBC offers the lowest interest rate of 4.5% and a decent processing fee of 2.5%.

Frank Graduated vs Graduated Plus

The interest only period in its Frank Graduated Loan can be as long as four years as per the bank’s terms. If you want a longer interest-servicing period on student loans, you can go for its Frank Graduated Plus loan, which allows an interest-servicing period of 5 years.

You can choose from flexible loan repayment plans stretching up to a tenure of 8 years. You can get a loan of up to $150,000 or 10 times the guarantor’s monthly income, whichever is lower.

You can apply for the OCBC Frank Education Loan whether you are going to study in private universities in Singapore or overseas institutions.

Interest Rate 4.5%
Processing Fee 2.5%
Tenure 1-8 Years
Loan Amount S$150,000 or 10 x Guarantor’s Monthly Income
Required Annual Income Guarantor’s $24,000
Early Repayment Fee 1% of Loan Prepaid
Late Payment Fee S$50
Age 17 and above

Check Official Page of OCBC Frank Education Loan

RHB Education Loan

If you want more flexible options for loan repayment, you can go for RHB Education Loan. RHB offers two study loan options – RHB Standard Repayment and RHB Graduated Repayment.

Monthly Rest Option

RHB also used to offer a monthly rest repayment option where the student didn’t have to pay any installment during the time they studied in school. But the information for the monthly rest option is not available on RHB’s official website. So we would recommend that you contact them to learn about it and know if it is available.

Standard Repayment and Graduated Repayment

In the RHB Standard Repayment option, the student pays a monthly installment based on the principal plus interest after the loan is disbursed.

Under the RHB Graduated Repayment option, the student pays a monthly installment only on the interest amount till the time you are in school. It is only after that you start paying installments on the principal as well as interest.

Interest Rate 4.78% p.a. and E.I.R. is 6.01%
Processing Fee 2%
Loan Amount 6x monthly income capped at S$100,000
Required Annual Income Guarantor’s $30,000
Early Repayment Fee 1% of Loan Prepaid
Late Payment Fee 5% above prime lending rate (Currently around 5.25%) on overdue installment
Cancellation Fee 1% of Undrawn Amount That is Cancelled
Age 18 and above

Drawbacks

RHB offers flexible repayment options but the drawback is that the loan amount limit is less as compared to other banks. So if your child is planning to study abroad and they need a loan more than S$100,000 (although this limit has to be confirmed by the RHB bank first), you may have to find another option.

POSB Further Study Assist Loan

POSB Further Study Assist Loan is an attractive offering for students who are afraid that they may be late on paying their loan payments and don’t want any penalty for prepayment of loan.

POSB Study Loan – Preferred Institution Low-Cost

If your child is planning to join any of the schools that POSB promotes, POSB study loan may turn out to be one of the cheapest options available out there. POSB charges an interest of only 4.60% if you study from its preferred institutions.

In this case, the repayments becomes flexible as your child gets a time period of up to 10 years to repay the loan. You can avail a loan amount of 10 times your monthly income capped at your unpaid tuition fee or S$80,000, whichever is lower.

POSB Study Loan – Regular

POSB Study Loan is also available in a regular version, for which the details are as follows:

Interest Rate 5.88%
Processing Fee 3%
Tenure 1 to 5 Years
Loan Amount 6 x Monthly Income capped at S$80,000
Required Annual Income $24,000 Guarantor’s, $18,000 Applicant’s
Early Repayment Fee Zero
Late Payment Fee $30 per overdue installment
Cancellation fee Zero
Age 18 and above

Keep in mind that the above rates are only applicable to POSB’s partner institutions.

Check more details on POSB education loan on their official page.

CIMB Monthly Rest Education Loan

CIMB also offers a decent loan option in which the student can make interest-service payments for the time they are in school and pay the majority of their loan installments after graduation.

For more info, check the bank’s website.

Loan Calculator

To check interest rates on your tuition fee amount, use the MoneySmart Loan Calculator. Using an interest calculator will give you a quick idea of how much loan payments you will make.

University Loans

Some universities offer their own loans through banks such as DBS, OCBC and UOB. These loans are the cheapest in the market with interest rates being average of prime lending rates. Such loans can cover up to 90 percent of tuition fee and 75 percent tuition fee if your child is joining any of the polytechnic courses in Singapore.

If you want to find more information on universities offering their own loans, click the links below:

So there you have it—the exhaustive guide to study loans in Singapore.

But before you go, there is one thing you must know:

What if Your Child Can’t Get a Job After School

Things don’t always go as planned. So you have to be prepared to deal with anything life could throw your way. If your child can’t get a job, the bank will ask the guarantor to pay since you nominated them at the time of loan approval.

If the guarantor is unable to make payments, the bank can even take legal action to get back the funds issued.

P.S. Now that you’re well-informed about student loans, you may want to check out these articles:

Dropping Out of University: What Happens Next?

How Much It Will Cost To Send Your Child to University in Singapore

Rum Tan

Rum Tan

Rum Tan is the founder of SmileTutor and he believes that every child deserves a smile. Motivated by this belief and passion, he works hard day & night with his team to maintain the most trustworthy source of home tutors in Singapore. In his free time, he writes articles hoping to educate, enlighten, and empower parents, students, and tutors.

You may try out his free home tutoring services via smiletutor.sg or by calling 6266 4475 directly today.