Are you a Singaporean or permanent resident wondering how to finance higher education? While there are a number of student loan options available in Singapore, it is important to learn how to compare and find an option that comes with low-interest rates, suits your needs, and that you can comfortably repay within the agreed time.

To help you get the best education loan in Singapore, here is our comprehensive guide. Keep reading to understand the different types of student loans and get answers to common questions about student loans in Singapore and the best way to apply.

What is a Student Loan?

A student loan, also known as an education loan, is a type of financing taken by students to fund post-secondary education. Note that student loans in Singapore also include funding for additional education-related costs, such as textbooks and accommodation. Once the education loan is approved, you are required to repay it together with interest plus any other fee, where applicable.

It is important to know that most payments are made through regular instalments. You should review the loan’s terms and conditions because payment might commence the month following the approval. However, some banks defer the repayment until after graduation.

Like other loans in Singapore, it is crucial to plan your student loan payment and strictly follow the agreed schedule. If you default, you risk incurring high penalties and hurting your credit score.

Student Loan in Singapore: What Options Do You Have?

In Singapore, there are several student loans that you can apply for to fund tertiary education, including the following:

1. CPF Education Scheme

This is one of the most common student loan methods in Singapore. The CPF Education Scheme allows students to use their parent’s Central Provident Fund (CPF) to meet 100% of their tuition fees when undertaking undergraduate studies. Note that only a few colleges, including the National University of Singapore and Singapore Institute of Technology, accept financing from the CPF Education Scheme.

The good thing about theCPF Education Scheme is that the interest rate is low, about 2.5%. Besides, the loan payment starts about one year after the student graduates from university. This period is considered significant because the student is likely to have secured employment.

2. Ministry of Education Fee Loan

Another option you can go for is the Ministry of Education Fee Loan, which covers 90% of the university fee. Unlike other student loans in Singapore that charge interest rates even before the student graduates, the MOE Tuition Fee Loan is different. The interest is charged after the student graduates from university.

The MOE Tuition Fee Loan is repayable for a maximum period of ten years. As a government loan, it is advanced to students pursuing higher education in Singapore public universities.

3. Personal Loans

If you do not qualify for the MOE tuition fee loan and CPF Education Scheme, the next best option for financing your studies is with a personal loan. Unlike other types of student loans, such as the CPF Education Scheme, a personal loan provides you with a free hand on how to use the funds. This means that once you get the money, you are free to use it the way you want, but it is advisable to direct it to education.

Here are other things that you need to know about using personal loans in Singapore:

  • In Singapore, many loan providers offer personal loans. You can opt to borrow from banks, online-based financial institutions, virtual banks, and peer-to-peer companies, among other options.

  • When you take a personal loan from a loan provider, it does not require collateral. Therefore, no one will come to seize your personal assets if you default. However, you should avoid defaulting because it can damage your credit score.

  • Most banks offering personal loans check the borrower’s credit score to determine the interest rate and personal repayment ability before approval or rejection. A higher credit score can get you a lower interest rate.

  • If you opt to use a personal loan for education, the loan payment is likely to start the month after the approval. Therefore, you should be prepared to start paying the loan and stick to the agreed schedule for the entire loan term.

Things to Understand Before Applying for a Student Loan in Singapore

When applying for a student loan in Singapore, it might be easy to ignore the fine details since payment is likely to start several years down the line. However, this is the wrong approach because the loan will likely significantly impact your finances. If you fail to follow the agreed payment schedule strictly, you risk getting slapped with huge penalties.

Here are the main things that you need to understand before applying for a student loan in Singapore.

Interest Rate

The interest rate of the student loan is the cost of the credit. It is the amount charged on the principal and is part of the total amount payable. The best student loan is the one that has a low-interest rate.

When checking the interest rate, it is important to follow the APR (annual percentage rate) instead of the monthly rate to get a better picture of the cost of the student loan.

Loan Tenure

This is the amount of time that you need to clear the loan. The maximum loan limit in Singapore is typically around 10 years, but it can vary depending on the bank. The loan tenure is very important because it also determines the amount payable.

When applying for a student loan in Singapore, it is advisable to go for the shortest term possible because it implies the total amount repayable will be lower than a longer term.

Early Payment Fee

Some banks require borrowers to pay a fee for early repayment. At this point, you might ask, “Why?” The fee is attached to the loan because paying early means the bank will be losing some of the anticipated profits.

Most students prefer to clear loans as fast as possible after graduating and getting jobs. Therefore, it is important to factor in the early repayment fee when considering your student loan options. With Lendela, you can see all of your student loan offers at a glance and easily find the ones that have no or low early payment fees.

Payment Ability

Once you get a student loan approved, you commence your monthly payments until the loan with interests gets cleared. You need to factor in personal repayment ability before making your application.

To boost your payment ability, it will be a great idea to consider building new channels of income. For example, you might consider taking a part-time job or renting part of your house. Then, direct the additional funds into paying the loan.

Lendela: The Most Convenient Way to Apply for an Education Loan in Singapore

Now that you know what getting a student loan entails, it is time to make the application. The process of applying for a student loan in Singapore can be tedious and lengthy, but using a trusted loan comparison and application site like Lendela can help greatly expedite and simplify the process.

With these three steps, you can easily apply for education loans in Singapore using Lendela:

  • Visit Lendela’s website and fill out a simple application for an education loan.

  • Lendela submits your application and documents to different banks who provide the offers they have for you. Compare the offers and apply to the one that best suits your needs.

  • Sign the agreement and receive the funds. As per your contract, you commence repaying the loan following the agreed-upon schedule until it is cleared.

Answers to Common Questions about Student Loans in Singapore

1. Can You Get a Student Loan Before College Admission in Singapore?

No. When applying for a student loan, one of the documents that banks require is the admission letter from the college you are joining. This is proof that you have been accepted by the school and that the money will go into paying for your education.

The only time when it is possible to get a loan for education before admission is if you decide to use a personal loan. Most banks only check your ability to repay and your credit score before approving personal loans.

2. How Long Does a Student Loan Take to Get Processed?

Once you have applied for a student loan and submitted the required documents, including the letter of admission, it will take about one week to process. However, it might take longer if additional documents are required by the bank. To get the application completed faster, consider using Lendela.

3. Can You Take Two Student Loans in Singapore?

Some banks will not allow you to take two student loans, but others do not mind. However, it is important to rethink your payment capabilities before applying for a second student loan.

The best thing is to only borrow an amount that you can comfortably pay.