One thing that you must know about Singapore is that studying in a university and getting a good education is noted as one of the most crucial stepping stones one must take to have a successful life and career in the future.
It doesn’t matter where you enroll sometimes, whether it be in NUS, SMU, NTU, SIM, PSB Academy, MDIS, or even in foreign universities abroad, always know that your graduation will help boost your financial and career life in the long run.
However, to be able to earn money, one must invest money into their education, too–and everybody knows that spending for university education doesn’t come cheap.
It is a good thing that loan options are available for students–but how will you know which education loan Singapore is best for you? This article will help you out.
What Types of Student Loans Are Available?
To be able to know which education loans are available out there, let’s look into the following bank options first.
You may refer to the table below:
| Lender/Product | Location | Interest Rate (Per annum) | Processing fee (Approved loan) |
| POSB Further Study Assist | Local | 4.38% | 2.5% |
| DBS Study Loan | Local | 4.38% | 2.5% |
| OCBC Frank Education Loan | Local | 4.5% | 2.5% |
| Maybank Monthly Rest Education Loan (Local) | Local | 4.45% | 2.0% |
| Maybank Monthly Rest Education Loan (Overseas) | Overseas | 4.45% | 1.5% |
| RHB Monthly Rest Education Loan (Local) | Local | 4.78% | 2.0% |
| RHB Monthly Rest Education Loan (Overseas) | Overseas | 4.88% | 2.0% |
| CIMB Monthly Rest Education Loan (Local) | Local | 5.39% | 2.0% |
| CIMB Monthly Rest Education Loan (Overseas) | Overseas | 5.39 | 2.0% |
Education bank loans sometimes may overwhelm you because of the various interest rates and other fees that come along with it. But do not let those bother you for now. First, you will have to know if you are qualified to apply for an educational loan in the first place.
Do You Qualify for a Study Loan Singapore?
Usually eligibility requirements for an academic loan in Singapore may vary, but those students who have been beneficiaries from tuition fee financing by Singapore Citizens from at least one (and/or may be a combination of the following items):
- Tuition Fee Loan
- CPF Loan
- MENDAKI Tertiary Tuition Fee Subsidy/Loan
- A fee subsidy/loan from a registered government agency
- Scholarship or grant
You will also need to have a guarantor with you to qualify for a loan. This guarantor must be aged between 21 to 62 years old and at the same time, is not an undischarged bankrupt person.
It is important to note that your guarantor should also have at least 30k Singaporean dollars as their minimum income.
What Are Education Loan Tenures Like?
In theory, the younger the borrower is, the longer the maximum educational loan tenure there is. On average, regulations have placed ceiling limits on the maximum education loans with tenures at 2 years, 5 years, and sometimes 10 years old. Your loan amount also plays an important role in this.
You should take note that the repayment period of 10 years will not start until you have already completed your academic studies in the university, and that you have already signed a contract with your employer.
Are There Any Additional Bank Fees With Education Loans?
The quick answer? Yes!
There are processing fees that correspond to your education loans in Singapore. Usually, banks in the country may peg their processing fees at 2% (especially if you refer to the table above) as based on the loan amount you have requested.
What you should know about this is that the additional fees won’t be charged upfront against you, but will rather be deducted from your first loans repayment, and in some cases, from the monthly income of your guarantor.
What Documents Are Needed to Apply for an Education Loan?
If you are of an age lower than 21 years old, your co-guarantor must be able to have the following documents for you to be eligible for the loan:
1) CPF Contribution history statement for the past 12 months
2) Letter of acceptance from your foreign, or from your local university;
3) Latest e-statement; and
4) Completed application forms and relevant documents with the student’s signature as a manifestation for finalization.
You wouldn’t have to worry much about this, because a majority of the guarantors in Singapore are usually the parents or the student’s guardians. People who deviate from that majority are usually those who are taking up their post-graduate courses, or their master’s degrees.
What Is the Lowest Education Loan Interest Rate You Can Get?
Banks in Singapore have the freedom to change their interest rate on their loans– depending on the market’s agility and demand. However, because of the country’s culture and values for quality, relevant, and accessible education, it seems like this demand won’t most likely die down until the next ages.
During academic peak seasons, financial lending organizations and banks in the country can actually bring their interest rates down with proportions of 3-6% per year and come along with the possibility of having an interest rate of 8%.
To be able to choose the best loan for you, as a student, try to make it a habit to regularly look for options and financial products online. Check and take advantage of loans that can give you the lowest interests from banks and other institutions.
Regular checking may take some extra work, but the payoff is really something that will benefit your guarantor and yourself– up to your annual income in the future.
Do I Have an Alternative Option?
Not all students and aspiring borrowers (as well as your guarantor) are fully comfortable with bank financing, especially with their monthly income or their annual income.
There are, however, very good options and alternatives to a traditional bank loan. Most parents opt for this alternative option, because it is not just cost-efficient, but it is also properly regulated by the Singaporean government.
Let’s take a look into some of the alternatives:
1) Government Scholarships
If you are a student who has qualified for the SGS program (Singapore Government Scholarship program), then this option is best for you. The SGS coverage includes your tuition fees except for dentistry, medicine, and architecture courses.
However, it presents some benefits for students who are taking up degrees in law, as they will not need to go through the Bar aside from having to pay for their tuition.
2) Scholarships Provided by Private Institutions
A lot of companies, organizations and other civil development institutions in and outside the country provide financial aid to promising students of their choosing.
Usually these institutions extend such aid to those who have not been given the enough financial resources to be able to access collegiate education.
It is important to note, however, that private scholarships are usually given to those students who do not just deserve financial aid–but also to those who choose academic specializations or majors that sync with the interests of the scholarship provider.
For instance, aviation companies may provide scholarships to tourism and hospitality majors, or those who are taking up aeronautics.
3) Personal Loans From Money Lenders
In all honesty, transacting with a licensed moneylender is the best alternative option a student can make if you are not comfortable in filing your study loan in Singapore with banks. Moneylenders in the country can provide you with a quick and ample loan amount up to SGD 18,000 (Up to 6 times of the borrower’s salary if their monthly income is SGD2,000). One of the capable lenders is Fortune Credit.
Mind you, know that with high loans you can still get the lowest interest rates. If you or your household has been struggling with your financial portfolio, and have been striving hard to qualify for a bank loan because of low credit scores, then having your personal loan amount borrowed from moneylenders is a good option.
With all this, Fortune Credit makes it easier for students and parents to file their loan applications swiftly and efficiently. To top this all up with efficiency and approval, you do not even need to have a guarantor for your loan!
Why Loan from a Licensed Money Lender?
Having your loans from a licensed moneylender is something that will benefit you for a number of reasons. Let’s examine each below:
1) Lower Interest Rate
As compared to bank financing, a loan taken from a licensed moneylender has a lower interest rate. This first reason alone is a really good reason why you should opt to have your loans taken from a moneylender. You do not even need a guarantor for this.
2) Short Term Repayment
For some people, 5 years’ worth of education loans may be very expensive (especially with banks). But getting your personal loan amount with a licensed moneylender gives you the option to pay up to 12 months, subject to the terms and conditions of the agreement.
3) Short Term Commitment
With this alternative, you are still bound to a certain interest rate, and even penalties. This is why you should strive to pay your monthly loan amount repayments on time.
Make sure to choose the best moneylender that is capable of paying the amount of academic expenses. All you have to do is to check on which product and loan amount would work best for your tuition, as well as for your annual income and monthly income.
Why I Should Repay My Student Loan as Quickly as Possible
1) Debt is Affecting You
No matter where you get your loan from–may it be through banks or through licensed moneylenders–this is still considered as borrowed finances.
At the end of the day, you will be dealing with things such as an interest rate, penalties, and other loan items. This is why you should repay your loan as quickly as possible–and if feasible, earlier than your payment due date.
Paying your loan as quickly as possible will also give you peace in your head, because you wouldn’t have to stress out your loan tenure on increasing interest and other penalties.
It is also internally fulfilling when you are able to budget your annual income to something that works with your loan.
2) Number Crunching
For most people–especially students and their parents– the mere act of borrowing money (especially with a huge loan amount) can be rather stressful and may take much of an emotional toll on themselves.
Some parents and students who apply for a loan would usually feel nervous because their annual income might not make them eligible to apply for a loan. You won’t have to worry, because unlike banks, licensed moneylenders look onto these things when it comes to loan applications.
You can avoid a high interest rate and penalties after conditioning yourself and equipping yourself with debt and loan knowledge. If you think that you consider yourself as someone who can be responsible enough to compute annual income vs your expenses, then it seems that you are ready to take your student loans.
3) Cost of Huge Monthly Loan Installments
People who have been borrowing multiple times already in their lifetimes would know this: a borrower (even a guarantor) must have plans and well-thought out strategies so that they will not fall into huge amounts of debt. Having knowledge on how a loan works, as well as a clear and well-informed strategy is something that can really maximize the benefits you can receive along with your loan.
Realistic Next Actions
What will you do next, then?
As a guarantor, or simply a student– preparing to embark on the next chapters of your academic life, it is a good practice to exercise adulthood and financial responsibility whenever you equip yourself with information and options out there on the market.
In terms of taking strategic and realistic actions, age doesn’t really matter. Even if you are just 21 years old, or older, the earlier you will know about how the financial industry works, the better.
After being fully equipped with knowledge on loans, be sure to use your acquired knowledge in choosing the best loans program for you.
Conclusion
In this article, we talked about various options in getting loans in the country for one’s education. There are a lot of options actually–from bank financing, up to personal moneylending.
Banks usually provide loans for education, but may require a lot of documentation, have a more rigorous process, and less flexible interest rates and repayment schedules. One’s annual income and minimum income is also being examined with bank financing.
Furthermore, while bank loans may be a feasible option, other requirements still need to be met, such as getting yourself a guarantor.
We also know that there are alternatives to bank financing. These include government and private scholarships–but may only be exclusive to not just top-performing students, but may only be to those whose courses are aligned with the interests of the private organization.
