SmileTutor Blog Students Advice For Students Should You Defer Your Education Loan During Covid-19 Pandemic?

Should You Defer Your Education Loan During Covid-19 Pandemic?

Singapore has recently reported that 19,900 jobs were removed from the market for the first quarter of the year, a number higher than the effects of SARS in 2003. COVID-19 has put the world at a pause as many are unable to go out of their homes and do their usual activities.

For many families, being cut off from work or having to work short hours is difficult to work with especially if they have taken out an education loan for their children.

Without funding, they won’t be able to pay it off the loans and they may even find themselves in further financial trouble if they miss a payment. This same problem is also a concern for working students who applied for education loans if they did not opt to pay their university fees with their CPF. 

Considering that everyone is having problems with their finances, some are considering deferring their payment for their loans. But, is it good to defer? What will happen once the deferment happens? How much do you have to pay?

Here is a short guide to help you decide whether you should defer your loans during this pandemic.

Does it make sense?

It is difficult to determine whether it is the right time to defer from your loan payments, especially with the effects it may have on you, your family and your financial standing.

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The rule of the thumb is that if you are able to afford it, as in your financial status are still healthy and your parents still have their jobs, you may not need to seek deferment at the moment.

Student loans like the mentioned ones here, in particular, are more expensive to pay for if you plan to defer from thanks to the interest you will accrue. However, if your financial situation is really dire, deferment may be an option you can consider.

If you are only looking for ways to save or pause paying temporarily, it is recommended that you don’t defer.

You can reach out to your lender to know what is available for you to take during this pandemic. When you get a loan deferment, you will be given a new repayment schedule and the full interest for the loan term and after you defer your loan. This will give you an idea if it would be best to defer or not.

How does student loan deferment work?

Fortunately, the Monetary Authority of Singapore announced last month that people with financial need can opt to pause their loan payments temporarily during the pandemic until the end of the year if they are qualified for it. Service and bank fees are also waived.

Should a person defer from their payments, the MAS said that their credit score won’t be affected.

The move is to help individuals with financial difficulties with their expenses while the pandemic is ongoing. However, they did say that these measures will mean higher interest costs once the pandemic is over.

The MAS has also teamed up with the country’s major financial institutions like Maybank, DBS and POSB to enable education loan borrowers to defer their principal and interest payments until January next year.

If they are under OCBC’s FRANK Education Loan program, they can defer their payments until May 31 next year.

Resilience Budget 2020

The Resilience Budget 2020 was also launched in light of the pandemic.

One of its provisions included the one year suspension for all student loan repayment and their interest charge starting June 1, 2020 to May 31, 2021. Graduates who have taken a student loan for university or polytechnic courses are qualified for this program.

Further changes may be added depending on the situation in the next coming months.

If you will opt to defer your study loan payments, it is important to take note that they will collect interest for the months you deferred for the principal amount.

Loan tenures can be extended once you apply for deferment. This will help those who took out an education loan have a larger budget for the meantime for other important necessities and not have to pay large monthly repayments once the deferment is final.

Deferred principals and interest will also be defrayed throughout the remaining months of your loan tenure to prevent large repayments. It will also not appear as a restructured loan on their credit report.

Eligibility for loan deferment

Unlike other COVID-19 relief programs which require applicants to show that they were affected directly by the pandemic, the special loan deferment scheme is available to all borrowers without any past due repayments or 90+ days of late payments.

It is also applicable to students with outstanding loans for either full-time or part-time university courses in Singapore or overseas.

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For Tuition Fee Loan borrowers looking for assistance, the Ministry of Education had earlier announced that all loan payments will be deferred until the end of May 2020.

To learn more about loan deferment, it is best to reach out to your lender for more details.

What to Remember

Taking out a loan for whatever purpose requires careful consideration because it is a large responsibility to take.

In this case, education loans can be expensive to pay for, especially if the loan program you have gotten does not offer flexibility and provisions for situations like this current pandemic.

If you are taking out an education loan, make sure that the rates you will be working with work well for your budget and in the future when you start paying them. It must also have provisions for situations like the pandemic where you need to defer payments. If you need assistance to get a laptop for home based learning, these are the listed financial help you can approach.

Every student has different financial situations that will play an impact on how they see loans. Even if your peers have deferred their education loans, it doesn’t mean you should as well if your financial situation is slightly better than theirs.

Look at all the options you have if you are looking for better ways to manage your finances like our suggestions during this pandemic before it affect your concentration in your studies as highlighted here . If you really need to defer your loans, speak to your lender immediately to find out more about the program and see if you will be able to handle it in the long run.

Stay abreast of the latest education news. Here are some of our articles:

Singapore Schools Step Up to Help Needy Students
Financial Help for Low and Middle Income Students in Singapore

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 or by calling 6266 4475 directly today.