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How to Choose the Best Student Loan in Singapore?

Student Loan Singapore
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Singapore is one of the leading countries in Asia renowned for exhibiting the utmost priority in their education sector and exceptional academic standards. 

Because of its rapid development, it is now recognized as a global center for education.

But like most educational institutions, you have to pay a hefty price to help maintain the quality education institutions provide. The cost of education in Singapore normally averages around SGD 8,000-9,000 annually in a public university. It costs more for non-subsidized Universities and for international students looking to study in Singapore.

Fortunately, there are other options provided to those who need financial support. If you are an achiever, there are many scholarships that the government or most universities can offer you. But if you do not qualify, student loans are an option you can consider.

What Is an Student Loan and How Does it Work?

In a nutshell, a student loan is a financial support scheme that helps students pay for their school fees, such as books and living expenditures. 

Many of these loans are presented at low interest rates to students. Normally, students are not obliged to repay these loans until the expiry of a grace period that begins after they finish their education. Like any form of loan, this loan includes monthly installments and interest rates.

Types of Student Loans

The two types of student loans are federal and private loans

Government funded education loans are categorized as a federal loan, typically with improved fixed interest rates and repayment plans. In contrast, a lender like a bank or credit union finances a private loan. Let’s discuss the specifics.

1. Federal Loan

  • CPF Education Scheme

The CPF Education Scheme is a loan scheme which allows you to tap your Ordinary Account (OA) savings to pay for your own, children’s or spouse’s subsidised tuition fees. 

Applications to use CPF savings to pay for your sibling’s or relative’s subsidised tuition fees will be assessed on a case-by-case basis.

Tuition fee coverage: You can use your OA savings up to the Available Withdrawal Limit under the Education Scheme. The Available Withdrawal Limit is either 40% of your accumulated OA savings. 

Interest: The interest takes into effect when the fund is withdrawn from the OA. Furthermore, the CPF-Ordinary Account’s interest is fixed at a minimum of 2.5% per annum. 

Loan tenure: Grantees of the CPF Education Scheme are obliged to pay for the amount withdrawn (in addition to interest) in cash, either in one lump sum or through regularly scheduled monthly payments over a maximum period of 12 years into the grantees’ Ordinary Account. 

Repayment usually begins after a year the student graduates or exits the university.

Who are eligible: The course registered is a full-time subsidised diploma/degree course at an Approved Educational Institution (AEI).

Guarantor: There is no need for a guarantor, unless the student is a foreigner.

  • MOE Tuition Fee Loan

Essentially, this type of educational federal loan supports financially struggling students with their tuition fees. The MOE Tuition Fee Loan is provided by the Ministry of Education (MOE) and is handled and regulated by 2 domestic banks, namely DBS and OCBC.

Tuition fee coverage: This scheme allows students to compensate for 90% of their bachelor’s tuition fee. However, it does not cover any miscellaneous fees. 

On the plus side, this scheme grants you the option to loan in percentages, in case you don’t feel it’s necessary to loan the 90% of your tuition fees. This tactic will render your repayment less challenging.

Interest: The interest rate is based on the prevailing prime rates of some local banks.  

Loan tenure: Grantees of MOE are required to pay the amount borrowed (including interest) in cash, or through regularly scheduled monthly payments (minimum SGD 100) over a maximum period of 20 years. 

Similar to CPF, repayment only starts after the student graduates. Additionally, the interest will still commence, notwithstanding if you are delayed with your monthly repayments.

Who are eligible: Singaporeans who are enrolled in any local educational institution, taking up any degree, are qualified for MOE with the exclusion of those from Lasalle and NAFA.

Guarantor: A guarantor is required, who must be at least 21 years old. 

2. Education Loans from Banks/ Financial Institutions (FIs)

Currently, there is a great amount of competition between financial institutions. This ensues financial institutions to come up with various and more appealing offers to persuade potential beneficiaries, bringing about a more diverse set of options students can choose from.

Below is a brief reference on how dominant banks in Singapore differ in terms of their education loan programs

Type of Education Loan Interest Rate (annual) Monthly Repayment (SGD) Processing Fee Additional Features
1. POSB Further Study Assist 5.88% $196 $193.89
  • The Minimum loan amount for POSB Further Study Assist is at: SGD 2,000
  • You can loan up to 6x your monthly salary (Up to SGD 80,000)
  • Maximum loan tenure: 5 years
  • Devoid of early redemption or cancellation penalty
  • Delayed repayment fee: SGD 30
2. Maybank Singapore Monthly Rest Education Loan 4.78% $193 $129.26
  • Minimum loanable amount: SGD 5,000
  • Loan up to 8x your monthly salary (Up to SGD 200k)
  • Maximum tenure: 8 years
  • Adjustable repayment options
  • Delayed payment fee: 3% + interest rate, minimum SGD 30
  • Partial Repayment Penalty: 1% on prepaid sum
  • Full Repayment Penalty: 1% on prepaid sum
 3. CIMB Monthly Rest Education Loan 5.39% $195 $129.26
  • Minimum loanable amount: SGD 1,000
  • Maximum loanable amount up to 8x your monthly salary (Up to SGD 200k)
  • Maximum tenure of up to 10 years
  • Appealing interest rates starting from 4.78% p.a. (5.22% EIR)
  • Delayed Payment Fee: S$80
  • Partial Repayment Penalty: 1% of amount sum
  • Full Repayment Penalty: 1% of amount sum
 4. OCBC FRANK Education Loan 4.5% $192 $161.58
  • Minimum loanable amount: SGD 1,000
  • Loan up to 10x your monthly salary (Up to SGD 150k)
  • Maximum tenure:  8 years
  • Adjustable repayment options
  • Delayed Payment Fee: S$50
  • Partial Repayment Penalty: 1% of amount sum
  • Full Repayment Penalty: 1% of amount sum

How to Choose the Best Study Loan

With so many loan providers on the market, shopping around for the best study loan can seem daunting. Fortunately, loan comparison sites, such as Loan Advisor, makes the whole process hassle-free.

When looking for the best low-interest education loan, ask yourself the following questions:

  • What interest rate can I afford? 
  • What repayment period works for me? 
  • How much can I realistically borrow?

Your interest rate is how much your lender levies so you qualify to loan from them. The higher the interest, the more sizable the repayment, which is why it is vital that you should research and compare rates from different financial institutions first. 

Let’s use the maximum loan amount as another example. It is common knowledge that it is in the nature of loans to require borrowers to set up a repayment plan. 

To determine the best offers in the market, you have to take into account your annual income, degree completion time, and other personal things that directly affect your education plans. 

Eligibility and Requirements

In terms of eligibility and requirements, financial institutions and other licensed money lenders have different criterias on acquiring a student loan. Here is a list of the basic eligibility requirements:

  • To acquire the most undemanding educational loan schemes, it will be much easier if you are recognized as a citizen of Singapore or a Permanent Resident (PR).
  • Most loans in Singapore require grantees to be between 18-65 years old, this also applies to student loans.
  • You are obliged to provide a guarantor/co-applicant/sponsor if you are under 21. Said guarantor should not be younger than 21 years old and must meet a minimum income criteria per annum of at least SGD 12,000 to 30,000.

Relevant documents you may need to present to acquire a student loan:

  • If you’re earning a stable income, produce your latest Income Tax Notice of Assessment and CPF statement stating your financial data for the past 6 months or the most recent 
  • Loan application form that contains all your relevant information
  • A back to back photocopy of your NRIC (accessible to PR and any Singapore citizen)
  • Guarantor’s proof of income per annum
  • Payment invoice disclosing your education fees
  • A back to back photocopy of the NRIC under your guarantor’s name
  • Copy of the letter of admission of the university you’re enrolling in
  • Documents that can authenticate your Singapore citizenship or permanent residence (PR) status
  • Certification of your annual income. May include your latest computerized payslip that indicate your salary
  • In some cases, international students also acquire student loans to study in Singapore. Basic requirements are student visa/student pass.

Check out here for the Ultimate Guide to borrowing from Licensed Money Lender in Singapore.

How to Choose the Best Education Loan

The best way to choose is to recognize what you are most comfortable with. Determine your needs and educational aspirations and start from there.

At the end of the day, determining the best student loan, all boils down to your specific set of needs as a student. 

At this major turning point in your life, Loan Advisor can take the hassle out of education loan searches and applications by offering a simple, straightforward comparison service. Compare education loans and receive up to three offers from Singapore’s top licensed moneylenders.  

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