Studying in Singapore might be your dream but with the expensive rate of education, getting the tuition fee and money to cover all the expenses might be an issue.
If you wish to broaden your horizons for studies overseas, applying for an education loan will offer a big help. While taking the education loan is the easiest part, the burden comes in during the repayment of the loan.
Therefore, this article will be your comprehensive guide to finding the best bank that offers an affordable overseas education loan with a favorable interest rate, repayment options, and a loan tenure in Singapore.
Banks That Offer Overseas Education Loan Singapore
There are four major banks in Singapore that provide education loans to further your studies overseas. The banks include OCBC Bank, Maybank, RHB Bank, and CIMB Bank. Each of the banks has varying loan amount, interest rate, loan tenure, and repayment periods.
The table below shows the various banks, interest rates, processing fees, loan amount, and the expenses covered by education loans during the course of study.
|Bank Name||Monthly Interest Rate||Processing Fee||Loan Amount Range||Covers Tuition Fee||Covers Living Expenses||Loan Tenure Range||Maximum number of Guarantors|
|OCBC Bank||Interest Rate 4.50%||2.5% Processing fee||Borrow up to 10x your monthly salary upto $150k||YES||NO||Up to 8 years||1|
|Maybank||Interest Rate 4.88%||2% Processing fee||Borrow up to 8x your salary||YES||YES||Up to 8 years||2|
|RHB Bank||Interest Rate 5.39%||2% Processing fee||Borrow up to 6x your salary||YES||YES||Up to 10 years||3|
|CIMB Bank||Interest Rate 5.39%||2% Processing fee||Borrow upto 8x your salary upto $200k||YES||YES||Up to 10 years||3|
All banks require students to be a Singapore citizen or a permanent resident. However, there are some slight variations across the banks where Maybank requires at least one guarantor to be a family member whereas RHB does not need a family member as a guarantor.
RHB Education loan covers both tuition fees and living expenses with a processing fee of 2% while Maybank is only limited to tuitions fees with a processing fee of 2%
The interest rate varies for study loan.
Factors to Consider before Applying for Education Loan
Before you proceed to apply for a student loan, it is important to consider the following crucial factors:
1. Eligibility Requirements
A loan applicant must be between 21 years old and he or she meets the lowest income requirement set by the education loan lender. An employee with a monthly income is also viable and can access a loan amount as low as $12,000 and as high as $30,000 for the tuition fee loans.
For a student who does not meet the age requirement for an education loan, he or she must have a guarantor with the age requirement, income, and a banking account. promises to pay off the loan in case of a default.
Guarantors are expected to be between 21-65 years old (must not be bankrupt upon loan maturity) old with a minimum of $24, 000 annual income for a student to qualify for the loans.
For eligibility, the banks have an income requirement per annum and age requirement for a guarantor for the purpose of liability.
2. Interest Rates
Interest rates are something everyone taking a loan should carefully consider. For those pursuing their studies and would wish to get an education loan, it is better to evaluate all the loan options and interest rates accruing for loans offered for your university education and compare the interest rate offered by different banks.
This will help you identify the best education loan and the bank that will be favorable in the long run.
For example: Since OCBC Frank education loan has a monthly interest rate of 5.39% you can use your monthly income to avoid piling up.
Late payments result in high-interest rates on both the rhb education loan and OCBC frank education loan.
3. The Type of Loan
There are two types of loans when it comes to education loans. These are the monthly rest loan and flat rate loan.
- Monthly Rest Loans: It is a type of education loan where the interest is calculated on the amount owed each month.
- Flat Rate Loans: Here, the interest is calculated and then spread throughout the loan tenure.
Knowing how the interest is calculated based on the loan type will help you know the loan interest make a better decision before the application process.
This refers to the period given to repay a student loan in installments. Every loan has a different tenure since some can last for one year whereas others have a time frame of 2 years, 5 years, 8 years, or up to 20 years. Apart from the period, different financial institutions offer different payment schemes for student loans used to pay the tuition fees.
Some of the common schemes to repay the study loan amount include:
- Education loan payments should start immediately after studies in monthly installments.
- The borrower is supposed to start making monthly repayment once the loan is disbursed
- Borrowers are required to pay off their interests until studies completion
- A student should pay a fraction of the installments as long as they are still in school.
Knowing all these schemes helps you in choosing a study loan, one should consider repayment with longer loan tenure since it depends on the income. The longer period may cause interest to accrue but once the income is stable it becomes easy to pay after studies
5. Penalties for Loan Defaulting
There are two types of penalties incurred after taking a study loan. These are penalties when one pays later also known as post payments after studies and penalties when a student decides to pay off the loan before the tenure is over and this is referred to as prepayments immediately after studies.
When a student decides to pay off the loan early upon course completion, an early payment fee of 1% of the whole amount owed for the study loans or the amount meant to be prepaid to clear the study loans may be incurred whichever is lower. This system is meant to favor the financial institution since early payments mean you pay less loan interest.
Therefore, it is important to note that prepayments attract low interest while post payment in a period of 5 years or more attracts high interest.
6. Fees and Charges
This refers to all the costs incurred while processing the loan. They include the processing fee, Therefore, it is important to calculate and know all the costs before the final application and signing of the contractual documents.
During the application, most money lenders in Singapore charge a 2% processing fee on the study loan which will be deducted from the amount they disburse initially. As part of the charges, also consider the cancellation fee in case you decide to cancel during the application process.
Check out here for the Ultimate Guide to borrowing from Licensed Money Lender in Singapore.
Why Consider Studying Overseas?
Apart from the quality of education, studying overseas has many benefits which come with a lot of opportunities. Here are the top 5 reasons you should consider studying abroad.
1. Career opportunities
Everyone strives to get a degree in a particular course to be a professional in the field. This is equated with the fact that a degree improves your career prospects. In the current world, employers now value graduates with international experience and education because they are believed to produce results.
2. Personal Development
When you go to study overseas, it puts you in a different environment thus the need to adapt. It can be overwhelming at first with the feeling of a new place which brings out your urge to explore. This helps you discover yourself while gaining an understanding of the culture of those around you.
3. Experience different Education
Some students choose to go overseas to experience a different kind of education. When you enroll in universities abroad, you get the chance to experience a side of your education major difference from your home education system.
4. See the world
Studying in a different country gives you the chance to explore and see the world and sometimes the biggest reason you should consider studying abroad. By choosing another country, you will experience new outlooks, customs, and activities.
5. Hone your language skills
Studying abroad gives you a chance to learn a new language based on the country you opt for. You have the chance to immerse yourself in a new language and learn from the natives speakers. In addition to that, your host university will likely offer language courses to make sure you are in a better place to learn the local language there.
Opportunities for Studying Overseas
If you have been wondering how you might get the chance of studying overseas, then you are in the right place.
After a careful analysis, here are 5 opportunities you can use :
1. Book for a Study Abroad Program Through Your University
This is considered the easiest way to book a program if you want to study abroad because students get the chance via their university or college, it is also convenient because study abroad credits easily fits the academic requirements and the primary fee is often linked to tuition payments.
2. Find a Study Abroad Program Through a Third-Party Provider
Third-party provider refers to companies or individuals that work in conjunction with the education sector with the main focus of linking students with study abroad programs. Such companies often charge a processing fee for their services and ensure easy transfer of your credit card/s.
This should be an option if your university does not offer the program you want, check with your academic counselor or study abroad office for more information on the best third-party provider and loans.
3. Enroll Directly With a University Overseas
Some overseas universities are open to application for students from Singapore, therefore, It is also possible to enroll directly in a university overseas. To help you choose a university of your choice, here is a list of information on international universities that you can apply to further your education.
4. Get Supported by the Federal Government to Study Abroad
You can enhance your education by studying abroad through Government partnered programs. The State Government funds students of all ages to study abroad by providing a tuition fee loan whether you are in college or university, therefore, all you need is to apply for such programs.
The Federal Government offers students a chance to studying oversea through:
Benjamin A. Gilman International Scholarships
These are scholarships devised by the Federal Government’s Bureau of Educational and Cultural Affairs for students’ education based on financial need and academic talent. The program awards more than 700 scholarships a loan amount of up to $5000 each year to outstanding students.
David L. Boren Scholarships
These are scholarships designed for undergraduate and graduate-level education by the US Department of Homeland security to support international studies in countries critical to national security thus including Singapore.
They offer a loan amount of up to $20,000 a year and eligible applicants must be signed on the account head and shoulders length above most of their peers.
These are scholarships offered to engineer students in Singapore to further their education in the electronics and technology sector. The scholarships are offered by Micron which is a leading worldwide microchip producer.
To be eligible, one must lead in their technology major and be able to provide evidence with full information that their course in Singapore will add value to their career. The candidates must be enrolled in the National University of Singapore Nyangany Technological University.
They offer up to $6000 per academic year.
Education is expensive and the fact that you took an education loan to finance your studies makes it more complicated due to the interest rates involved in repayment.
However, you can take advantage of Loan Advisor to help you find the best education loan with a low-interest rate. They are a loan comparison site that helps you compare and select the best loan options in Singapore.
Make a strategy to repay the loan using your monthly income or link to your bank and allow repayment using the money. You can also opt to cut some expenses on your credit cards to speed up the payment of the education loan and avoid interest rate accumulation.