Here’s How A Study Loan Can Help You Achieve Your Dreams Of Further Education

Written by Shannon Wong on April 25, 2024

Key Takeaways

Study loans in Singapore enable access to higher education by providing the necessary financial support to cover tuition and living expenses. They come with flexible repayment options that commence after graduation, facilitating focus on studies without immediate financial stress, and represent a strategic investment in one’s future career and earning potential.

Furthering your education can be a significant investment in your future.

However, the opportunity to study at higher education institutions, whether locally or abroad, comes with considerable financial implications. Tuition and associated costs can accumulate to overwhelming amounts, making it challenging for many prospective students to pursue their academic dreams without financial assistance.

Study loans are crafted to alleviate these financial barriers, providing crucial support for students who need help covering education costs.

This article will discuss how study loans can help you achieve your educational goals, what to consider before applying, and tips for managing your loan effectively.

Education in Singapore

Universities in Singapore are categorised into two main types: Autonomous Universities and Private Education Institutions, as detailed below.

Autonomous Universities

These institutions are publicly funded and include well-known universities, which are:

  1. National University Of Singapore
  2. Nanyang Technological University
  3. Singapore Management University
  4. Singapore University of Technology and Design
  5. Singapore Institute of Technology
  6. Singapore University of Social Sciences

Private Education Institutions

Unlike autonomous universities, the number of private education institutions may change over time. Plus, they do not receive government subsidies. Institutions like Kaplan Higher Education Academy and SIM Global Education offer a variety of degrees and qualifications that are often aligned with international standards.

For both types of institutions, besides tuition, students must also consider other expenses such as books, equipment, and living costs, which can further escalate the financial burden.

Overseas Education

The third option for Singaporeans is to pursue education outside of the country. Studying abroad offers more than just academic qualifications; it is an experience that broadens horizons, exposes students to new cultures, and develops independence.

But as obvious, this is another expensive option. This is where study loans come in and offer essential support for students who require assistance with educational expenses.

Why Should I Consider a Study Loan?

Considering a study loan is a practical choice for several reasons:

Financial Accessibility: Higher education can be costly, and a study loan provides the necessary funds to cover tuition and living expenses, making education accessible for those who can’t afford it upfront. This opens up opportunities for enhanced career options and personal growth.

Flexible Repayment Terms: Study loans offer low interest rates and payment plans that don’t start until after graduation. This allows students to focus on their studies without the immediate stress of financial burdens.

Investment in Future Earning Potential: Investing in higher education through a study loan can lead to higher future earnings and better job prospects. It’s an investment in your financial future and personal development, offering long-term benefits beyond just income.

Types Of Study Loans In Singapore

There are four types of study loans available in Singapore:

  • CPF Education Scheme Loan
  • Loans from Banks and Financial Institutions
  • MOE Tuition Fee Loan
  • MOE Study Loan

CPF Education Scheme

The CPF Education Scheme is a popular method for financing studies in local public universities in Singapore.

Under this scheme, students can use up to 100% of their study fees from their parents’ CPF Ordinary Account. CPF education loans typically offer a more favourable interest rate of 2.5%, making them a more cost-effective option compared to bank loans.

Repayment of the CPF loan does not commence immediately but starts a year after graduation or upon terminating your studies. This delay provides graduates ample time to prepare for loan repayment. Although repayment during study is not mandatory, starting early can decrease the debt load after graduation.

The interest on the loan is calculated based on the remaining amount owed upon completion of your studies.

Eligibility Criteria for the CPF Education Scheme

To be eligible for the CPF Education Scheme in Singapore, the following criteria must be met:

  • You must be a first-time undergraduate at a local public university such as NUS, NTU, SMU, SUTD, SIT, SUSS, Lasalle, or an institution within the poly-FSI framework.
  • You must be a Singaporean citizen.

Disqualification from the scheme may occur under these circumstances:

  • There are insufficient funds in your parent’s CPF Ordinary Account, or they have reached the maximum withdrawal limit.
  • You are enrolled as a part-time student at a college or university.
  • You are pursuing a second undergraduate degree and had previously financed your first degree using the CPF Education Scheme.

How CPF Education Loan Repayment Works?

Repayment of the CPF Education Scheme loan commences one year after graduation or when you leave your studies.

Three months before your first scheduled repayment, CPF will send a reminder about the repayment. Payments can be made monthly or in a lump sum over the duration of the loan.

While the official start for repayment is set for a year post-graduation, you have the option to begin making monthly payments while still in school. This early start can significantly reduce the amount owed upon graduation since interest is calculated based on the outstanding balance at that time.

Education Loans From Banks Or Financial Institutions

Bank loans are suited for students attending private universities or studying abroad, as these students typically do not qualify for the CPF education scheme or the MOE loans.

To be eligible for a bank education loan, applicants must be at least 21 years old. Those under 21 must have a guarantor, co-applicant, or sponsor. Banks may require an annual income between $12,000 and $30,000 from either the applicant or the guarantor, and some banks may also have age restrictions for guarantors.

The tenure for bank study loans ranges from one to ten years. Borrowers have the option to repay either the accrued interest while still in school or the total interest and principal upon graduation.

Bank LoanInterest Rate
CIMB Education Loan5.83% - 9.1% (Varies with tenure)
DBS Tuition Loan4.75%
RHB Monthly Rest Education Loan4.78%
Maybank Education Loan Secured4.6%
Maybank Education Loan Unsecured7.05%
OCB Frank Education Loan5.17%
POSB Further Study Assist Loan4.38%

Each bank has its own terms and conditions, which may also affect your eligibility depending your educational institution’s choice. This is where getting a personal loan from a licensed money lender can be a rather flexible and convenient option.

Considering a study loan to finance your education in Singapore or abroad? At 1AP Capital, we provide tailored loan solutions that align with your educational aspirations. Whether you’re studying locally or heading overseas, our straightforward loan process ensures you get the financial support you need without hassle. Start your study loan application with 1AP Capital today and take a confident step toward your academic goals.

MOE Tuition Fee Loan

The MOE Tuition Fee Loan, offered by Singapore’s Ministry of Education, provides substantial financial aid to students attending polytechnics and autonomous universities, covering a significant portion of their tuition fees. Here’s a detailed overview of this loan scheme:

Who is Eligible?

  • Polytechnic Students: Full-time students enrolled in subsidised diploma courses at any of Singapore’s polytechnics are eligible.
  • University Students: Full-time students in subsidised undergraduate and postgraduate programmes at autonomous universities can apply.
  • Part-time Students: Singapore Citizen students pursuing part-time subsidised undergraduate programmes at autonomous universities are also eligible.

Loan Coverage

  • Polytechnic Students: The loan covers up to 75% of the subsidised tuition fees payable.
  • University Students: For university students, the loan covers up to 90% of the subsidised tuition fees payable by Singapore Citizens.

Key Features

  • Interest Terms: The loan is interest-free while the student is enrolled in the course. Interest begins to accrue only upon graduation or upon leaving the institution.
  • Repayment Period: The maximum loan repayment period is up to 10 years for polytechnic loans and up to 20 years for university loans, providing ample time for graduates to manage their finances before and after entering the workforce.

How to Apply

  • Application Process: Depending on the institution, students can apply through specific banks:
    • Nanyang Technological University (NTU) and National University of Singapore (NUS): Students may apply through DBS or OCBC.
    • Singapore Management University (SMU): Students should approach OCBC.
    • Other Institutions: Students at other eligible institutions should apply through DBS.

This loan scheme is designed to make higher education more accessible by alleviating the financial burden of tuition fees, thereby enabling more students to pursue and achieve their academic goals without the immediate stress of high educational costs.

MOE Study Loan

The MOE Study Loan, offered by Singapore’s Ministry of Education, is designed to support students who have already utilised the maximum allowable amount from the Tuition Fee Loan. This loan aids in covering the remaining tuition fees and provides an option for a living allowance loan.

Here is an in-depth look at the MOE Study Loan:

Who is Eligible?

  • Diploma Students:
    • Must be Singapore Citizens or Singapore Permanent Residents.
    • Enrolled full-time in subsidised diploma courses at local polytechnics.
    • Have utilised the maximum loan amount under the Tuition Fee Loan scheme or other loans and fee subsidies covering up to 75% of subsidised tuition fees.
    • Gross monthly per capita household income must be $2,700 or less.
  • Undergraduate Students:
    • Open to Singapore Citizens, Singapore Permanent Residents, and international students in full-time subsidised undergraduate courses, and Singapore Citizens in part-time subsidised courses.
    • Must have taken up the maximum loan under the Tuition Fee Loan scheme or other financial aids covering up to 90% of the subsidised tuition fees for Singapore Citizens.
    • Gross monthly per capita income must be $2,700 or less for Singapore Citizens and Permanent Residents, and $1,200 or less for international students.

Students who have secured financial aid covering 100% of subsidised tuition fees can only apply for the living allowance loan part of the Study Loan.

How it Works

  • Coverage
    • For polytechnic students, up to 25% of the subsidised tuition fees and a living allowance loan of $2,000 per year.
    • For university students, up to 10% of the subsidised tuition fees for Singapore Citizens and a living allowance loan of $3,600 per year.
  • Interest Terms
    • Interest-free for Singapore Citizens and Permanent Residents with a monthly household per capita income of $950 or less.
    • For household incomes between $951 and $2,700, the loan is interest-free during the study period, with interest accruing only after graduation or upon leaving the institution.
  • Repayment Period
    • Up to 5 years for interest-bearing loans at the polytechnic level and up to 20 years at the university level.
    • For interest-free loans, the repayment period is up to 2 years for polytechnic and up to 5 years for university loans.

How to Apply

Students interested in the MOE Study Loan should approach their respective educational institutions for the application process.

This comprehensive loan scheme helps ensure that students who need additional financial support beyond the Tuition Fee Loan can still afford their education, effectively easing the financial burden and allowing them to focus on their studies.

Factors to Consider Before Applying for a Study Loan

Eligibility Requirements

When considering a study loan, students should evaluate several key factors to ensure they choose the best option for their financial situation:

  • Eligibility Requirements: Applicants usually need to be at least 21 years old. Younger students can still apply if they have a guarantor or co-signer, such as a parent, whose annual income fits the lender’s requirement.
  • Interest Rates: The interest rate on a study loan can significantly affect the total cost over time. Secured loans generally offer lower rates as they are backed by collateral, while unsecured loans have higher rates due to the increased risk to the lender.
  • Types of Loans: There are mainly two types of loans: Monthly Rest Loans, where interest is calculated on the remaining balance each month, and Flat Rate Loans, where interest is calculated on the full loan amount upfront and divided across all payments.
  • Repayment Terms: Repayment terms can greatly influence your financial planning after graduation. This includes the repayment schedule, with some loans requiring payments during studies and others starting after graduation; grace periods that delay repayment commencement; and loan tenure, which can range from 1 to 20 years, affecting both instalment size and total interest paid.

Managing Your Study Loan

Managing a study loan effectively involves proactive strategies to prevent debt from becoming overwhelming. Starting repayments early, even before they’re due, can significantly reduce the total interest paid. Regular, on-time payments are crucial, and setting up automated payments can help avoid penalties. When possible, making extra payments can decrease both the principal and the overall interest cost.

It’s also vital to be mindful of common pitfalls that can negatively impact your financial health. Only borrow what is necessary for your educational expenses to avoid excessive debt. Fully understanding the terms and conditions of your loan is crucial to avoid any surprises. Maintaining a budget that includes loan repayments will aid in effective financial management.

Many educational institutions offer resources such as financial advising services and online tools to help students manage their loans. Keeping detailed records of all loan transactions is essential for monitoring debt levels, planning future finances, and resolving any discrepancies or disputes efficiently.

Making Your Educational Aspirations a Reality

Pursuing further education is a significant decision that comes with substantial financial considerations.

Study loans offer a practical solution to manage these costs, making educational aspirations achievable for many. By understanding the different types of loans available, the conditions associated with them, and how to manage repayment effectively, students can make informed decisions that align with their academic goals and financial realities.

Ready to fund your future education but need financial support? At 1AP Capital, we understand the importance of your educational goals. We offer a variety of loan options that are straightforward and tailored to your needs.

Let us help you finance your education so you can focus on what matters most—your studies and future career. Apply for a loan with us today and take a step closer to realizing your academic aspirations.


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