How Does A Study Loan Work In Singapore?


In Singapore, a study loan is a financial assistance option for those who wish to pursue higher education but lack the funds to do so. The loan can cover tuition fees, living expenses, and other related costs.

But how does a study loan work in Singapore?

For starters, it’s important to note that interest rates on study loans in Singapore can vary depending on the lender. The loan amount and repayment period can also be affected by your credit score. 

Let’s explore why you should consider taking out a study loan and how to go about it.

What Is A Study Loan?

A study loan is specifically intended to help you pay for the costs associated with higher education. 

This can include tuition fees, living expenses, and other costs associated with attending school or university. 

The loan is paid back with interest after you have completed their studies or found employment.

What To Consider When Taking Out A Study Loan

When considering taking out education loans in Singapore, it’s vital to follow these steps:

  • Research your options: Look into different types of loans offered by government-funded programmes, banks, and other financial institutions. Compare the interest rates, repayment terms, and other relevant details.
  • Assess your financial situation: Determine how much money you will need to cover your education expenses and whether an education loan is the best option for you.
  • Check your eligibility: Make sure that you meet the lender’s eligibility criteria and can provide all the required documents.
  • Compare the interest rates: To find the best study loan interest rate, compare the interest rates offered by different lenders and choose the one that provides the most favourable terms.
  • Review the repayment terms: Make sure you understand the repayment terms and conditions of the loan, including the interest rate and the repayment period. This will help you plan your budget and avoid any financial difficulties in the future.
  • Consider alternatives: Explore other options, such as scholarships, grants, or bursaries, before taking out a Singapore study loan.
  • Read the fine print: Carefully read and understand all the terms and conditions of the loan before signing the loan agreement to avoid any surprises later on.
  • Seek professional advice: If you have any doubts, consult a loan or financial advisor to help you make the best decision.
  • Check on the loan’s affordability: Assess if you can afford the loan payments and if they are suitable for your income and expenses.
  • Make sure your credit score is fine: Your credit score may affect your eligibility and the interest rate offered on a loan.
  • See if you have collateral to pledge: Some study loans may require collateral or a property or a co-signer.

It’s crucial to weigh all these factors carefully before taking out a study loan. Always be realistic about your ability to repay the loan on time and understand how does a study loan work. 

Read all the terms and conditions carefully before signing the loan agreement.

Eligibility Criteria For The CPF Education Scheme

The Central Provident Fund (CPF) Education Scheme is a government programme in Singapore that allows you to use up to 100% of your child’s course fees using your CPF. 

The following educational institutions are participating in the scheme: 

  • NUS
  • NTU
  • SMU
  • SIT
  • SUTD
  • SUSS
  • NAFA
  • Lasalle
  • Institutions under the Polytechnic-Foreign Specialised Institution (“Poly-FSI”) Framework

The following criteria must be met:

  • Age: You must be below 55 years old and have a valid Singpass account to apply.
  • CPF savings: You must have sufficient CPF savings in your Ordinary Account (OA) or Special Account (SA) to cover the withdrawal limit for the course you’re applying for.
  • Education institution: The course must be offered by an approved institution.
  • Course: The course must be a full-time or part-time diploma, degree, or post-graduate study.
  • Repayment: You will need to start repaying the amount withdrawn from your CPF account after you have completed your studies.
  • National Service: If you are a male Singapore citizen, you must have completed National Service before using your CPF savings for education.

The CPF Education Scheme is only available for Singaporeans and permanent residents. The withdrawal limits for different courses may vary – check the CPF website for more information and guidance.

How Does The CPF Education Loan Repayment Work?

Repayment for the loan works as follows:

  • Repayment: You have to start repaying the education loan one year after graduation or termination of studies, whichever is earlier. 
  • Interest rate: Interest is charged on loan at the prevailing OA interest rate.
  • Minimum sum: You must maintain a minimum sum in your CPF account during repayment.
  • Repayment amount: You must repay the amount withdrawn from your CPF account, including interest, to your CPF account. 
  • Repayment period: You can pay either in one lump sum or via monthly installments over a maximum of 12 years.
  • Installment amount: This will be calculated based on the loan amount and repayment period. A student cannot use his or her own CPF savings for the repayments to the CPF member’s CPF Account.
  • Suspension: Repayment of the loan can be temporarily suspended if you cannot work for a valid reason, such as a medical condition or retrenchment.

What Is The MOE Tuition Fee Loan?

The MOE Tuition Fee Loan (TFL) is a financial assistance programme offered by the Ministry of Education (MOE) in Singapore. 

Such loans help students who cannot pay their tuition fees by providing them with a loan that can be used to cover the cost of their education. 

The loan is for Singaporean students pursuing full-time undergraduate studies in government-funded universities or polytechnics in Singapore.

Education Loans In Singapore From Banks Or Financial Institutions

Education loans from banks and financial institutions (FIs) are specifically designed to help you pay for the costs associated with higher education. 

These loans are offered by banks, financial institutions, and licensed money lenders, as well as government-funded programmes.

The loan application process is similar to a regular loan. You must submit a loan application and provide proof of income and other relevant documents. The loan amount and repayment period may vary depending on the lender and your credit score.

The interest rate on these loans can also vary, so you need to compare the interest rates offered by different lenders before applying for a loan. 

The loan tenure for such education loans is typically 10 years. 

Some banks and FIs may also require collateral, such as a property or a co-signer, to secure the education loan.

Learn How To Acquire A Singapore Study Loan Today

University education can be quite expensive, so many students take out study loans in Singapore to help cover the costs. 

Now that you know how does a study loan work, it’s essential to take the time to choose the right loan for you before committing to any obligations. Make sure to research the loan and understand important details such as the interest rate, charges, and loan tenure.

If you’re not eligible for a study loan or the amount offered is insufficient to cover your tuition fees, you can consider applying for a personal loan from licensed money lenders such as BST Credit

This is a good option if you need to get approved for a loan quickly.

Apply for a loan now in just five minutes or contact us for more information. We will be more than happy to hear from you.

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