It is important to make an informed decision when it comes to choosing between MOE Tuition Fee Loan and CPF Education Scheme because it will play a major role in financial planning and pay the subsidised tuition.
Below are key details of what you need to know as part time undergraduate students, Singapore citizen or international students before filling an application form for government loans.
MOE Tuition Fee Loan
Also known as the Ministry of Education Tuition Fee loan is a Government study loan offered to undergraduate students who enroll in Singapore Institute of Technology, Singapore Management University, National University of Singapore, Nanyang Technological University, polytechnics and autonomous universities to help them cover their subsidised tuition fee.
The eligibility criteria ensures that both Singapore citizens and International students stands a chance after qualifying the following:
- Enrolled to study full time in Singapore polytechnics
- Enrolled to study full time for subsidized undergraduate and postgraduate programs in an autonomous university.
- Be a Singapore citizen student studying part-time subsidized undergraduate programs in the autonomous universities.
A guarantor who is not bankrupt is required and he or she must be an adult between the age of 21 to 60.
The MOE Tuition grant covers up to 75% of subsidized fees for polytechnic students and up to 90% of the subsidized Singapore citizen fees for university students. Therefore, student loan quantum can only be up to 75% and 90% of the subsidized fees for polytechnic students and university students respectively.
For students who have obtained other loans, the total loan amount should not exceed 100% of the subsidised fees payable . To ensure this, one is required to indicate the details of other loans taken when filling the application form as part of the government requirement.
The MOE loan is free during the course of study and starts to accrue once the student graduates. At this time, students should start considering the repayment and interest which is calculated based on the different banks, either DBS, OCBC and UOB.In cases of late payments, a rate of 1% interest will be levied per month on the past due amount.
4.Loan Repayment terms
Upon graduation, the loan beneficiaries are contacted by the bank(by a letter) requesting their confirmation on a preferred mode of loan repayment. The bank offers two options where a graduate can repay a one lump sum or monthly in equal installments.
For a case of the monthly repayment, you are required to pay a minimum of $100 per month which is set to commence not later than 2 years after graduation or when a graduate secures a job. The maximum repayment period for the loan is 20 years commencing from the first payment.
However, due the COVID-19 Pandemic, there was an interest suspension of loans for all graduates for 1 year. This was set to commence from 1 June 2020 to 31 May 2021. The notice also stated that other study loans due will be suspended as a way of offering Government support.
CPF Education Scheme
The CPF Education scheme is a loan scheme that allows individuals to use their ordinary account savings to pay their own, children’s or spouses subsidized tuition fees for full-time diploma or degree courses at approved educational institutions.
This loan involves two parties, which is the owner of the account and the person studying. To qualify for this type of loan you must meet the following conditions:
- The owner of the account must be using the ordinary account savings to pay his/her fees, for their children, spouse, relative, or sibling subsidised tuition fees.
- The owner of the account must have sufficient OA savings and an available withdrawal limit to be used under the CPF Education Scheme.
- The course registered and paid for should be a full time-time subsidized diploma/degree from an Approved Educational Institution.
While using the CPF Education Scheme, the loan amount varies if you are using it to pay for your own, your children, your sibling or spouse’s fees, and when using it pay for your relatives’ fees.
Your Ordinary Account savings can be used to cover 100% of your own, your children, your sibling or spouses tuition fees payable while the following rates will be used if paying for relatives:
- 10% for relatives at the university
- 20% for relatives studying at a polytechnic, pursuing a Technical Engineering Diploma, or a Technical Diploma in a Culinary Arts at the Institute of Technical Education.
- 50% for relatives studying at an Art College.
Once the first amount is withdrawn from the OA savings, the education loan interest starts to accrue until it is fully paid. The rates are computed based on OA interest rates which are adjusted quarterly while the loan interest is calculated monthly.
Please click OA interest rates.
Upon completion or termination of studies, Singapore citizens and International students have a grace period of a year before they start paying the education loan. The Central Provident Fund Board usually contacts the students three months before the commencement via a letter to provide them with loan repayments due details.
In a case where the student wishes to start early payment, they will contact the board via their website please click Web Portal under My Request. Thereafter, the loan can be repaid once in a lump sum which is considered convenient to avoid the penalty interest from accruing or monthly for a maximum of 12 years.
If the student chooses to pay monthly, the monthly installment will be calculated based on the loan amount and the repayment period. The student can make repayment via GIRO or other modes of payment approved by the CPF Board.
The Differences Between MOE Tuition Fee and CPF Education Fee
|Features||MOE Tuition Fee Loan||CPF Education System|
|Interest||- Interest is based on the average prime rates of the local banks currently at 4.75% per annum. Interest only start to accrue after graduation.||- The interest rates are pegged to the Ordinary Account interest rate currently at 2.5% per annum |
- Interests start to accrue immediately once OA savings are withdrawn
|Repayment Period||- Repayment starts one or two years after graduation or termination of studies. The maximum repayment period is 10 years for Diplomas and 20 years for Degrees.||- Repayment starts one year after graduation |
- Beneficiaries have a maximum of 12 years to repay
|Loan Amount||- The loan covers 75% of the fees for Diploma courses and 90% of the tuition fees for Degree Courses||- The Tuition fee Loan covers 100% of the tuition fees subject to the amount of CPF savings available for education|
The Tuition fee Loan covers 100% of the tuition fees subject to the amount of CPF savings available for education
If you are fully incapable of raising cash for your tuition fee, you should go for the CPF Education loan since this guarantees full payment of your tuition fee but if you are capable of raising some cash to fund your studies, you can opt for the Government loan for undergraduate students.
Up to this point, the ball is now in your court and if you’ve been trying to figure out which loan to apply for the tuition, I bet you can now make an informed decision to secure a brighter future through education.
It is also your role to repay the loan, doing it on time will help you avoid an increment in charges and help you attain early financial freedom.
Find out more options for Singapore Study Loan here!