It can be daunting to sieve through the vast internet in search of the best education loans in Singapore. After all, not everybody is privileged enough to further their studies without having to worry about the financial side of things.
It’s all well and good if your parents can afford to pay for your education comfortably, but for those who consider higher education a luxury, there’s a real need to look towards other solutions — preferably something that isn’t going to be too expensive in the long run.
Apart from the CPF Education Loan Scheme or MOE Tuition Fee Loan, soon-to-be university undergraduates can also consider an education loan from a bank.
What Is An Education Loan In Singapore?
Are you a student looking to finance your education in Singapore? With the rising costs of tuition and living expenses, education loans have become a vital resource for many. To help you navigate the world of study loans, we've conducted extensive research to identify the best options for 2023. Whether you're aiming for overseas studies, seeking low-income support, or looking for loans with unique features, we've got you covered.
Best Education Loans In Singapore 2023
1. Best Student Loan for Overseas Studies: OCBC FRANK Education Loan
- Interest Rate: 4.50%
- Processing Fee: 2.5%
- Tenure: 1-8 Years
- Max Principal: S$150,000 or 10x monthly income of guarantor
- Annual Income Requirement of Guarantor: S$24,000
Why Choose OCBC's FRANK Education Loan for International Studies?
When it comes to financing education abroad, affordability is crucial. OCBC's FRANK Education Loan stands out with its low interest rate of 4.5%, making it the most cost-effective option for international studies in Singapore. Additionally, it allows students to borrow substantial amounts, up to S$150,000 or 10 times their monthly income, ensuring you have the financial support you need for prestigious universities overseas.
2. Best Education Loan for Low-Income Students: Maybank Education Loan
- Interest Rate: 4.45% p.a. (ELBR + 0.45% p.a.)
- Processing Fee: 2.25% of approved loan amount or minimum $300; whichever is higher
- Tenure: 1-10 Years
- Max Principal: S$200,000 or 8x monthly income of guarantor
- Annual Income Requirement of Guarantor: S$30,000
Why Choose Maybank's Education Loan for Low-Income Support?
Maybank's Education Loan offers a lifeline to low-income students. With a low minimum income requirement, it's accessible to part-time students seeking financial aid. The interest rate of 4.45% p.a. and reasonable processing fees make it one of the most affordable options for local studies. Moreover, it provides substantial loan amounts of up to S$200,000 or 8 times the borrower's monthly income.
3. Study Loan With the Lowest Penalty Fees: POSB Further Study Assist
- Interest Rate: 4.38%
- Processing Fee: 2.50%
- Tenure: 1-10 Years
- Max Principal: S$160,000 or 10x combined monthly income of you and your guarantor
- Annual Income Requirement of Guarantor: S$24,000
Why Choose POSB Further Study Assist for Low Penalty Fees?
POSB Further Study Assist offers unique flexibility when it comes to education loans. While it can be more affordable than some options, especially if you attend preferred institutions, it comes with a maximum loan limit of S$80,000. However, its standout feature is the absence of early repayment penalties, making it an excellent choice for students who want payment flexibility. Ensure your school is on POSB's list of preferred institutions to enjoy its cost-effective program.
4. Our Top Picks For the Best Interest-Only Study Loans in Singapore
For those who prefer to delay full loan repayment until after graduation, interest-only study loans are a valuable option. While they allow you to focus on your studies during your academic journey, keep in mind that they may lead to higher overall costs.
Best Interest-First Student Loan: OCBC FRANK Education Loan - Graduated
- Loan of S$25,000 over 6 Years: OCBC FRANK - Standard: Monthly instalment During School: S$397, After School: S$397, Total cost: S$4,198
- OCBC FRANK - Graduated: Monthly instalment During School: S$94, After School: S$1,091, Total cost: S$6,314
- OCBC FRANK - Graduated Plus: Monthly instalment During School: S$94, After School: S$2,134, Total cost: S$6,864
Why Choose OCBC's Graduated FRANK Education Loan for Interest-Only Payments?
OCBC's Graduated FRANK education loan offers the most cost-effective interest-only option in Singapore. With a low interest rate of 4.5% and a modest processing fee of 2.5%, it provides flexibility with up to 4 years of interest-only servicing. For even longer interest-only periods, consider the Graduated Plus option. It's an affordable choice for students who want to manage their finances wisely during their studies.
5. Best Moneylender Education Loan For Bad Credit: Friday Finance
- Eligibility: Singaporean Citizen/PR, 21-65 years of age
- Administrative Fee: Starting at 2%; 50% refunded when loan is fully repaid on-time
- Loan Duration: Up to 18 months
- Interest Rate: 1-3%
- Max Principal: Annual Income < S$20,000: S$3,000; Annual Income > S$20,000: Max 6x Monthly Income
- Early Repayment Fee: S$0
Why Choose Friday Finance for Educational Loans with Bad Credit?
Friday Finance understands the challenges faced by students with low credit scores. They don't have a minimum credit score requirement, making them a viable option for those seeking flexibility in repayment schedules. Plus, they offer Personal Loan Protection Insurance, providing a safety net in case of unforeseen circumstances. While the loan tenure is limited to 18 months, it's a great choice for those expecting to pay back a smaller loan within a year while building their credit.
6. Study Loan From Your School: DBS, OCBC and UOB
Some universities and polytechnics in Singapore offer their own loans through DBS, OCBC, and UOB. These loans typically have low-interest rates and deferred repayment until after graduation.
When considering an education loan, think about your financial situation and whether standard or deferred repayment suits you best. Standard repayment loans are suitable if you have substantial savings or financial support, while deferred repayment loans spread costs over a more extended period.
Choose the education loan that aligns with your goals and financial circumstances. It's a crucial step towards securing your education and future success.
Which Bank Has The Best Education Loan?
There isn’t a straightforward answer to this question. You’ll have to take into account several factors when deciding whether or not the education loan is the best option for you:
- Interest rate: The lower the interest rate, the less you’ll end up paying in interest on top of the principal amount. Note: some banks offer lower interest rates but charge higher processing fees
- Processing fee: An extra fee you’re required to pay when the loan is disbursed. It is typically a small percentage of your loan amount
- Maximum loan amount: Some courses are more expensive than others. Banks have different limits for the maximum loan amount you can borrow. This can range from 8X to 10X your annual income, or a specific amount such as S$150,000 or S$200,000
- Loan tenure: How long do you need to pay off the loan? In general, the longer the loan tenure, the higher the interest charges incurred
- Early repayment fee: Most banks charge an early repayment fee — usually 1% of the prepaid amount.
How Much Loan Can I Get From The Bank For An Education Loan?
When seeking an education loan in Singapore, understanding the maximum amount you can borrow is crucial. Several factors influence this limit, including your monthly income, your guarantor's monthly income, and the nature of your chosen course of study.
In general, Singaporean banks typically permit borrowers to access a maximum of 8X to 10X their monthly income or a specific cap, such as S$150,000 or S$200,000. However, the actual loan amount approved depends on individual circumstances and the specific lending criteria of the bank.
For example, suppose you are a student with a monthly income of S$2,000. In that case, you may be eligible to secure a loan of up to S$20,000 for your education expenses. However, if you are pursuing a high-cost program, like medicine or law, the bank may approve a higher loan amount to accommodate your specific needs.
Importance of a Having a Guarantor
It's important to note that having a guarantor is a requirement for most education loans. Your guarantor takes on the responsibility of repaying the loan on your behalf in case you are unable to do so. This individual must be a Singapore citizen or permanent resident with a strong credit history.
If you're uncertain about the loan amount you qualify for, it's advisable to reach out to multiple banks and compare their loan offerings. You can also utilize a loan calculator to estimate your monthly repayments and assess the overall cost of the loan. By doing so, you can make an informed decision that aligns with your educational aspirations and financial capabilities.
Do You Qualify For The CPF Education Loan Scheme?
While the CPF Education Loan Scheme interest rate is pegged to the interest rate that funds in the CPF OA earn: 2.5% p.a., keep in mind that the CPF Education Loan Scheme is only available to students doing full-time subsidised diploma and degree courses at Approved Educational Institutions (AEIs).
Whatever amount you’ve withdrawn from the CPF OA has to be repaid along with the accrued interest in cash. Plus, interest starts accruing the moment the CPF savings are deducted from the CPF OA.
Tertiary schools eligible for the CPF Education Loan Scheme
- National University of Singapore (NUS)
- Nanyang Technological University (NTU)
- Singapore Management University (SMU)
- Singapore Institute of Technology (SIT)
- Singapore University of Technology and Design (SUTD)
- Singapore University of Social Sciences (SUSS)
- Nanyang Academy of Fine Arts (NAFA)
- LASALLE College of the Arts (LAS)
- Nanyang Polytechnic (NYP)
- Ngee Ann Polytechnic (NP)
- Republic Polytechnic (RP)
- Singapore Polytechnic (SP)
- Temasek Polytechnic (TP)
- ITEs
Do You Qualify For The MOE Tuition Fee Loan?
The MOE Tuition Fee Loan is available to full-time students enrolled in local polytechnics and autonomous universities as well as Singaporean students who are studying part-time subsidised undergraduate programmes in the autonomous universities.
Even though the interest rate is 0% during the course of study, interest will start accruing upon your graduation. If you are confident of repaying the loan in full immediately after graduation, no interest will be charged at all.
Which Education Loan Should You Choose?
Apart from weighing the pros and cons as well as costs associated with taking out an education loan, you might want to also pay attention to when the monthly repayments start.
Certain banks require you to start paying off your education loan the month after your education loan is approved. Others allow you to start repayments after graduation.
If you’re going for the CPF Education Loan Scheme or the MOE Tuition Fee Loan, the loan repayments start a year after you’ve graduated.
What other financing options do you have besides the above-mentioned? Some licensed moneylenders in Singapore offer education loans, too.
What If You Cannot Repay Your Loan?
There’s no free lunch in the world. If you can’t or refuse to repay your loan, it’s not surprising for your lender to take legal action against you and/or your loan guarantor — this is especially true if you are borrowing from a bank or licensed moneylender.
Read about the possible repercussions for skipping loan repayments to find out what you could be in for.
SingSaver is a personal finance comparison platform which provides free, quick and easily accessible resources to help consumers understand personal finance products in Singapore; including credit cards, personal loans and travel insurance.
This article was first published in SingSaver and republished on theAsianparent with permission.
ALSO READ
Best Education Savings Plan Options for Children in Singapore