Planning to enter a university in Singapore? Then, it’s time to think about funding your studies. For those starting tertiary education, study loans Singapore offers can be a great choice.
Want to know more about how does a study loan work? Simply read on.
What Is A Study Loan?
A study loan is a type of loan for students to cover their tuition fees, living expenses, and other related educational costs. It is usually unsecured and can be taken from banks, financial institutions, or the government.
Study loans Singapore offers great financial assistance to students who are in need of funds for their studies.
Singapore study loans usually have lower interest rates and repayment periods than most other forms of loans, making them an attractive option for students.
With the availability of various types of student loans Singapore, it is important that you consider how does a study loan work in each of the options before making a choice.
What To Consider When Taking Out A Study Loan
Generally, most of these loans for students work in the same way as personal loans. You borrow a certain amount of money with an agreed interest rate and the repayment period. The key is to understand how does the study loan work in each scheme, how much you need to repay, and how long you have to do so.
A few things to consider when taking out study loans Singapore offers are:
- Student loan interest rates
- Repayment period
- Loan repayment options
- Eligibility criteria for the loan
- Trustworthiness of the scheme or the organisation
Some of the most common options for education loans Singapore offers include:
- CPF education scheme
- MOE tuition fee loan
- Education loans Singapore from banks or other financial institutions
Let’s take a look at how does a study loan work in each of the options.
Eligibility Criteria For CPF Education Scheme
The Central Provident Fund (CPF) Board runs an exclusive education scheme to help Singapore Citizens pay for their tertiary education.
CPF allows the usage of your parent’s CPF account to cover 100% of the tuition fees. In case of using another relative’s CPF account, then they can pay 10 to 50% of the tuition fees using their OA (Original Account) savings depending on the course taken.
Any student in Singapore can apply for CPF Education Scheme if they meet the following criteria:
- You use your or your relative’s OA savings
- You have the required OA saving and withdrawal limit
- The course you pursue is a full-time one at an Approved Educational Institution (AEI)
In the case of loans for students who are not Singapore PR or citizens, they may need someone to guarantee their loans.
How Does The CPF Education Loan Repayment Work?
The repayment must start right after one year of student graduation for the education loan Singapore CPF scheme offers. In case the student terminates the course before completion, the CPF education loan repayment must start within one year from the date of termination.
Notifications will be sent to the student regarding the loan repayment three months prior.
For the loan for students, you can either repay in one lump sum or over a maximum period of 12 years in monthly instalments.
The interest rate for the CPF education loan will be calculated based on the loan amount and the repayment period chosen.
To save on interest paid, it is wiser to fully clear this account quickly.
Clearing the repayment faster will also allow the CPF account holder to use their CPF savings for other important life goals such as retirement planning.
What Is The MOE Tuition Fee Loan?
The Ministry of Education (MOE) Tuition Fee Loan is another form of study loan Singapore offers to Singaporeans and Permanent Residents. The maximum loan amount available for this loan is 90% of the student’s course fees.
This type of loan does not charge any interest during the course period.
Once the student completes their course, they have two years to start repaying the loan taken – either in one lump sum or through monthly instalments.
Just like a CPF loan, the faster the loan is repaid, the lower will be the net interest paid.
Education Loans From Banks Or Other Financial Institutions
Most banks and financial institutions in Singapore provide education loans for students to cover full or partial tuition fees, living expenses, and other study-related costs.
The student loan interest rates in such education loans Singapore banks or financial institutions offer are quite higher than the government schemes.
Most institutions will require someone to act as a guarantor for students less than 21 years. The income and the credit score of the guarantor or the student will also be checked before approving the loan.
Before applying for study loans Singapore in banks or other financial institutions, there are a few things you must consider.
- How does a study loan work in the institution? What are their terms?
- Study loan interest rate details – when it starts, how much is levied, etc…
- Repayment terms – when does loan repayment must start and how long are you allowed to complete the repayment?
- Whether or not a guarantor is required for the loan, and if so how much their income should be.
- Is the financial institution licensed and legal?
CreditMaster can be one of those trustworthy and licensed moneylenders in Singapore who can offer you the best study loans Singapore.
To sum up, how does a study loan work in Singapore depends on the type of loan taken. Each education financing scheme provides different types of benefits and restrictions. Understanding these aspects before taking out a study loan will help you make better financial decisions. It is best to have discussions with those who already have experience in the matter and compare several loan options to make the best choice for your situation.
Always remember that taking a loan should be done responsibly and with much consideration of how you will pay it back in future. A study loan can open up new opportunities, so use it to your advantage.