Study Loan

If you had to part with S$27,000, wouldn’t you go ‘wait, what?!’

That’s about the cost of studying in a local autonomous university for three years. 

For private universities, tuition fees can go as high as S$19,000 a year. That’s about $57,000 for the course of three years.

Ask yourself: do you have the requisite funds to part with such a huge sum of money?

Singapore’s education landscape is widely accepted as one of the best and most rigorous in the world. After completing six years of primary school, four to five years of secondary school and two to three years of tertiary education, you’re now either ready to put your skills to good use and joint the workforce or pursue higher education in either a local or overseas university.

Of course, as you climb higher the education ladder, there are prices to be paid. University education does not come cheap, and even more so if you are looking to study overseas. That being said, do not let your finances limit your education options. Study loans can mean a world of difference and are meant for students who might not be able to afford their school fees, but yet are still looking at pursuing higher education. Well, good for you! Taking out that much needed study loan to further your studies and ease your financial burden might not seem like such a bad idea after all. This way, you can focus on what is truly important: your studies while enjoying your life overseas (for those seeking education abroad).

Most people looking to take a study loan in Singapore must first figure out whether they will be attending a private or public institution. If one opts for a public one, then they will find that the school often has study loan options. Alternatively, they can use CPF funds to finance their education.

Singapore Education

Universities in Singapore are grouped as: Autonomous Universities and Private Education Institutions. 

Autonomous Universities:

• National University Of Singapore
• Nanyang Technological University
• Singapore Management University
• Singapore University of Technology and Design
• Singapore Institute of Technology
• Singapore University of Social Sciences

Private Education Institutions*:

• Kaplan Higher Education Academy
• Management Develop Institute Of Singapore
• PSB Academy
• SIM Global Education (Singapore Institute Of Management)

Overseas Education

Most students from Singapore choose to go overseas to countries like the UK, Australia or US to pursue their University Education. For more information on the Universities available overseas, students can visit the Overseas Academic Link website to find out more.​

Factors To Consider Before Applying For A Study Loan

Before you proceed to apply for your study loan, it is important to take note of the following points:

1) Eligibility Requirements: The applicant has to be at least 21 years of age. Additionally, he or she must meet the lowest income requirement as set by the lender. This amount can be as low as S$12,000 and as high as S$30,000. Since most students do not meet this particular requirement, they need to have sponsors who do. One’s parents can stand in to sponsor the loan. However, it doesn’t have to be a relative. Furthermore, one can have even two sponsors. A guarantor is an alternative to having a sponsor. The guarantor promises to pay off the loan in the event that you default. In most cases, a guarantor is expected to earn a minimum of S$30,000 per year in order to qualify.

2) Interest Rates: Anyone taking a loan, including a study loan in Singapore, must consider the interest rates. For these, it is important to shop around and find out what is available. Beware that the loan with the lowest interest rate may not necessarily be the best. It is thus important to look at the total package being offered before making a decision. Since interest rates change from time to time, asking those who already have study loans how much they are paying may not give you an accurate picture of what to expect. It is better to speak to the lender directly.

3) The Type Of Loan:  When it comes to an education loan, you will need to pick the type of loan to get. The first one is the monthly rest loan and the second one is a flat rate loan.

  • Monthly rest. With this loan, the interest is calculated based on the amount owed each month. So it is interest on the current balance from month to month.
  • Flat rate. The total interest to be paid for the duration of the loan is calculated and spread out throughout the loan tenure.

Most times, monthly rest loans tend to be less expensive than those on a fixed rate calculation. It is therefore, important that you speak to your relevant financial institution and find out how your debt will be calculated. 

4) Repayment: Do note that not all study loans have the same tenure, some can last for one year whereas some might go up to 20 years. In addition, different financial institutions offer varying payment schemes, such as:

  • Requiring that the borrower start making monthly repayments as soon as the money is disbursed 
  • Requiring that one pays off a fraction of the installments for as long as they are still in school.
  • Requiring that one pays off interest every month till he/she has completed school
  • Does not require any payments to be made until one has completed his/her studies. Once he/she has graduated, they will be required to start making payments each month.

5) Penalties: Extra attention has to be paid here. There are penalties for late payments and also prepayments. Prepayment penalties are particularly important to consider because should you decided to pay off the loan before the tenure is over, then a penalty of about 1% of the whole amount owed, or 1% of the amount you are hoping to prepay, may be incurred. The reason why this is done is to benefit the financial institutions. By paying off the loan early, you pay less in interest, thus they opt for a claw back system to get some of that money back through the penalty.

6) Fees And Charges:  It is very important to calculate the total cost of the loan prior to signing the contract. This will include the cost of penalties, interest, charges and fees. Most lenders will charge a 2% processing fee on a study loan in Singapore. This amount will be deducted from the amount they disburse initially. Consider also a cancellation fee in the event that you sign the loan contract and then decide not to go for it. Other lenders also charge a disbursement fee, depending on how you want them to pay the money.  

 

Student Loans Provided By Banks for Local Universities

Below is a breakdown of the list of banks that provide local education loans and overseas education loans for university students**

DBS Tuition Fee Loan / Study Loan

DBS’s tuition fee loan and study loan applies for local universities and private educational institutions respectively. The tuition fee loans are offered by local institutions and administered by DBS Bank to Singaporeans, Singapore Permanent Residents and International Students studying in the respective Autonomous Universities. These two loans offers distinctly different features as listed below:

DBS Tuition Fee Loan

DBS Tuition Fee Loan (Local Autonomous Universities)
Interest RateInterest free during course of study, Charged at an average prime rate of DBS, OCBC & UOB upon graduation
Processing FeeCharged based on the transaction amount with the payment plan you signed up for (3, 6, 12, 24 months)
Loan TenureUp to 20 years, upon completing course of study, Minimum repayment of $100/mth
Maximum PrincipalUp to 90% of the subsidised tuition fees payable by Singapore students
EligibilityAll students are welcome, as long as they are enrolled in any of the Autonomous Universities, Foreign students who are paying full fees are not eligible
Age Requirement (Applicant)All students enrolled in a Singapore Autonomous University
Age Requirement (Guarantor)21- 60 years old
Annual Income (Applicant)None
Annual Income (Guarantor)Not disclosed, Not discharged as bankrupt

DBS Study Loan

DBS Study Loan (Private Education Institutions)
Interest RateInterest free during course of study, Charged at an average prime rate of DBS, OCBC & UOB upon graduation
Processing FeeCharged based on the transaction amount with the payment plan you signed up for (3, 6, 12, 24 months)
Loan TenureUp to 20 years repayment period for interest bearing loan AND/OR, Up to 5 years for interest free loan with repayment commencing no later than 6 months after course completion, Minimum repayment of $100/mth
Maximum PrincipalUp to 20% of the subsidised tuition fees payable by Singapore students and/or up to $3,600 annual living allowance
EligibilityAll students are welcome, as long as they are enrolled in any of the Private Education Institutions, Foreign students who are paying full fees are not eligible
Age Requirement (Applicant)All students enrolled in a Singapore Private Education Institute
Age Requirement (Guarantor)21- 60 years old
Annual Income (Applicant)None
Annual Income (Guarantor)Not disclosed, Not discharged as bankrupt

Maybank Education Loan

Maybank’s education loan works best for low income students who are seeking part time studies because of their benefits. It has the lowest minimum income across all banks at 18,000 per annum with attractive benefits such as an interest rate of 4.78% and a 2% processing fee. It also allows you to loan up to 8x your monthly income, or $200,000, whichever is lower.

Maybank Education Loan
Interest Rate4.78%
Processing Fee2%
Loan Tenure1 – 8 Years
Maximum Principal200,000 or up to 8x the monthly income of guarantor
EligibilitySingaporean / Singapore Permanent Residents
Age Requirement (Applicant)18 years and above
Age Requirement (Guarantor)21 – 65 years old (Upon loan maturity)
Annual Income (Applicant)≥ $18,000
Annual Income (Guarantor)≥ $24,000, Not discharged as bankrupt

OCBC FRANK Tuition Fee Loan / FRANK Education Loan

Similar to DBS, OCBC offers two kinds of study loans: Tuition Fee Loan (for those enrolled in a local Autonomous university) and Education Loan (for local private educational institutes or overseas universities). If you’re looking to take out a loan for overseas universities, this would work best for you. With a low interest rate of 4.5% per annum and a high principal amount – $150,000 or 10 times the monthly income of the guarantor, the OCBC Frank Education loan takes into account the high amounts of spending that one will incur when studying overseas.

OCBC FRANK Tuition Fee Loan

OCBC Frank Tuition Fee Loan (Local Autonomous Universities)
Interest RateInterest free during course of study
Processing FeeUndisclosed
Loan TenureStart repayment upon graduation OR, Once applicant finds a job within 2 years OR, Within 20 years
Maximum PrincipalUp to 90% of tuition fees
EligibilitySingaporean / Singapore Permanent Residents
Age Requirement (Applicant)17 years and above
Age Requirement (Guarantor)21 – 60 years old (Upon loan maturity)
Annual Income (Applicantv)None
Annual Income (Guarantor)≥ $24,000, Not discharged as bankrupt

OCBC FRANK Education Loan

OCBC Frank Education Loan (Private Education Institutions/Overseas Universities)
Interest Rate4.5%
Processing Fee2.5%
Loan Tenure1 – 8 Years
Maximum Principal150,000 or up to 10x the monthly income of guarantor
EligibilitySingaporean / Singapore Permanent Residents
Age Requirement (Applicant)17 years and above
Age Requirement (Guarantor)21 – 65 years old (Upon loan maturity)
Annual Income (Applicant)None
Annual Income (Guarantor)≥ $24,000, Not discharged as bankrupt

Managing Your Study Loan

Once you take out a student loan, it is important that you manage that debt well to avoid getting into a financial pickle. Here are some tips that can help a student on a loan manage it well:

  • Be proactive about paying your debt: If these loans are not properly managed, the interest and penalties can accumulate to a large amount of money, thus plunging you into a financial hole.
  • Remain Conscious: Even if you don’t have to pay much or anything at all while in school, it pays to remain conscious of the debt. By so doing, you will avoid taking other loans that can escalate the amount of money that you will be required to pay every month once you graduate. You don’t want to end up feeling overwhelmed in the end.
  • Keep to the agreement:  If you do not follow the terms of the agreement, you may end up negatively affecting your credit rating. This escalates and once you have poor credit, you will have to pay higher interest rates for other essentials in the future, such as a car or a home.

Prior to taking out a loan, be sure to consider all your options and then take the best one. Consider the terms of the loan and take what is ideal for you. Consider the amount of money you are making now and what you will likely make once you graduate, your family’s needs, as well as other financial commitments. Take the loan based on how much you can be able to pay every month, and use this to pick a loan tenure. Remember that it is better for you to make small payments over a long period of time, than to miss payments or default altogether. 

Why Should I Consider A Study Loan?

These days, getting a degree has become commonplace. With a University degree, individuals will be able to acquire more skills and knowledge, improving their productivity at work and in the process, be well compensated. Hence, if you find yourself struggling financially to pay for your school fees, it might be wise to consider a study loan.

At Student Loan Guru, we firmly believe that you shouldn’t let your finances limit your self-improvement options, which is why we are here to help you ease your financial burden. Speak to us today to find out more about our study loans, and how they will be able to help you achieve your dreams of furthering your studies. 

*Do note that only the more popular Private Education Institutions are listed above
**It is best to check with the respective bank(s) website for more details