How Does A Study Loan Work In Singapore?

Although a college degree can never be a disadvantage, having to pay tuition fees is often a major drawback. Or not, depending on how much information you have. The solution is simple: student loans.

So how does a study loan work in Singapore? Quite easily, for those in the know.

If you’re considering taking out a study loan, you definitely need the following tips and strategies to enable you to make the best possible choice.

Keep reading.

What Is A Study Loan?

A study loan is an amount of money collected from a government institution or private lender for the express purpose of covering college costs.

You’d agree that your heart skips a bit when you consider the huge financial commitment involved in getting a college education.

It can be a bit of a vicious cycle because while you need a degree to improve your quality of life in the future, you’re currently required to pay large sums of money to acquire the said degree.

Thankfully, there are loans for students that you can access to help bridge the gap.

How Does A Study Loan Work?

Much like other loans, a study loan allows you to borrow money, and repay with interest at a more convenient time.

However, this particular loan can only be used to pay for college tuition or other supplementary costs like accommodation, laptops, school books, and other fees.

Study loans remove the stress of sourcing for your tuition fees, thereby leaving you free to focus on your studies. While there are study loans in Singapore that cover only the tuition fees, other loans extend to the added expenses that accrue in the course of your education.

Even better, you most likely will not have to start repaying the principal until you’re done with schooling, leaving you with more time to focus on your studies.

So it all comes down to thoroughly assessing your needs and making an informed choice.

What To Consider When Taking Out A Study Loan

Taking out education loans in Singapore is fast becoming the norm as costs of living skyrocket. Lack of financial assistance should not be a hindrance to your dreams.

By simply accepting monetary assistance in the form of by education loans, you can attain your ambition of getting a tertiary education.

But what do you need to know before taking out a student loan? While there are many different features of study loans, here are some tips to consider to decide the right fit for you:

  • How much do they charge in processing or administrative fees? While processing fees can seem negligible, they do tend to add up with a higher loan amount.
  • What is the interest rate? The interest rate can easily be regarded as the most important factor to consider when taking a loan. Loans for students are usually lent with the understanding that you only start to pay back after you graduate and get a job. In the meantime, you have to keep paying interest on the principal amount. You do not want to go for loans with interest rates that will cripple you.
  • Is there a maximum loan limit? Some degrees or colleges require more tuition fees than others. For these, you’d need to access loans with higher maximum limits. The same rule applies if you need a loan to pay for other associated costs.
  • How favourable is the repayment structure? Singapore study loans usually offer standard payment or deferred payment structures. If you can afford to start repaying the loan while in school, the standard payment is the right fit for you. The deferred structure, on the other hand, would let you pay only interest until you are done with school.

What Type Of Loan Is Best For Student Loans?

The CPF Education Scheme is one of the best type of loan for student loans.

One of the best things about paying for your tution using CPF education scheme is that you can pay using the savings in the Ordinary Account (OA) of your spouse, relatives, or siblings. Other type of loans worthy of mention are:

  • MOE Tuition Fee Loan
  • Education Loans from Banks and financial Institutions.

Can I Use CPF To Pay Study Loan?

The CPF loan offers financial assistance and does not charge interest while you are still studying.

However, it has some limitations. You can use CPF to pay for a study loan only if you’re studying for a first undergraduate degree at any of the following approved schools: NAFA, NTU, SUSS, NUS, Lasalle, SMU, SUTD, SIT and Poly-FSI institutions.

Eligibility Criteria For CPF Education Scheme

The CPF education scheme is available for students who are studying full-time undergraduate programs. You can pay for your tuition using your CPF savings, your Spouse’s CPF savings, or your parent’s.

Apart from the choice of college and degree status, here are other factors that would make a student ineligible for the CPF loan:

  • A second degree
  • You are not a citizen of Singapore
  • Part-time degree or diploma course
  • Depleted savings in the CPF OA

How Does The CPF Education Loan Repayment Work?

There are two CPF education loan repayment plans: students can either repay the full loan in one lump sum or spread it out over 12 years in monthly installments.

In addition, you must start paying the CPF loan once your studies have been terminated or one year after graduation, depending on which comes first.

However, you may not use your own CPF savings to make repayments to the member’s CPF account.

What Is The MOE Tuition Fee Loan?

This is another option that is open to local uni students. Currently, the MOE tuition loan is open to students of local public universities except for Lasalle and NAFA.

Much like the CPF loan, you are also not charged interest while you are studying. With this type of loan, students can cover up to 90% of their tuition fees.

Apply For Study Loans From Banks Or Financial Institutions

If you’re wondering how does a study loan work, you can simply apply for one in a bank or financial institution.

While banks offer some of the lowest student loan interest rates, they can have rather stringent eligibility criteria. Hence, you can explore more affordable options like licenced money lenders.

Horison Credit is a licensed money lender and we believe that your choice of university or degree should not hamper your access to student loans in Singapore.

This is why we offer study loans with affordable interest rates and meagre administrative fees. There are no hidden charges, and you get to focus on achieving your dreams. Contact us today to apply for a loan.


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