Everything You Should Know About Student Loans and Repayment

This post was originally posted on Planner Bee.

The rising cost of education in Singapore, ranging from thousands to tens of thousands of dollars, can be a significant financial burden for many families. Not everyone can afford tuition upfront, especially with other living expenses.

Student loans provide a solution by helping students cover educational costs without immediate financial pressure. This allows them to focus on their studies and personal growth.

In this article, we will look at the different types of student loans available in Singapore, including government-backed and bank loans. This will help you choose the best option for your needs. We will also cover repayment plans and how to manage your loans without too much financial stress. Lastly, we will share practical tips to help you work towards a debt-free future after graduation.

How do student loans work?

1. Application process: Students can apply for loans through banks, financial institutions, or government schemes.
2. Interest rates: Government-backed loans tend to have lower or deferred interest rates, while bank loans often come with higher rates.
3. Repayment terms: Repayment typically begins after graduation. The duration of repayment can vary depending on the loan scheme, ranging from five to 20 years.
4. Loan forgiveness or assistance: In certain situations, like working in public service or facing financial hardship, students may receive extended repayment terms or even partial loan forgiveness.

Government-backed loans

Ministry of Education (MOE) Tuition Fee Loan

The MOE Tuition Fee Loan is a government-funded programme that helps students pay for part of their tuition fees. It is available to those enrolled in subsidised courses at polytechnics, autonomous universities, LASALLE College of the Arts, Nanyang Academy of Fine Arts (NAFA), and Singapore Management University (SMU).

This loan is available to full-time students in MOE-subsidised diploma or degree courses, as well as part-time Singapore Citizens (SC) students in subsidised undergraduate programmes at autonomous universities. It remains interest-free during studies, with interest starting only after graduation or withdrawal.

Ministry of Education (MOE) Study Loan

The Ministry of Education (MOE) Study Loan is available to students who have taken the maximum Tuition Fee Loan but still need financial assistance. The Tuition Fee Loan covers up to 75% of tuition fees, and students can apply for the MOE Study Loan to cover the remaining 25%.

There are different criteria and factors to consider for students enrolled in diploma and degree courses.

Mendaki Tertiary Tuition Fee Subsidy (TTFS)

The Tertiary Tuition Fee Subsidy (TTFS) is a financial aid programme in Singapore that helps Malay students by covering a portion of their tuition fees at local tertiary institutions.

To qualify, students must be Singaporean or PR with at least one Singaporean parent, identify as Malay (including related ethnic groups), and have a per capita income (PCI) of S$2,000 or less. They must also be eligible for an MOE Tuition Grant and enrolled in their first full-time diploma or degree.

The subsidy is tiered based on PCI:

• S$1,400 and below – 100% subsidy
• S$1,401 to S$1,700 – 75% subsidy
• S$1,701 to S$2,000 – 50% subsidy

The TTFS is part of Singapore’s wider effort to support the educational aspirations of the Malay community, ensuring that financial challenges do not prevent access to higher education.

Bank loans

FRANK Education Loan by OCBC

The FRANK Education Loan by OCBC helps students fund their higher education in Singapore and overseas. It offers a competitive 4.5% effective interest rate (EIR 5.17%) and lets you borrow up to 10 times your monthly income or S$150,000, whichever is lower.

You can choose from three repayment plans:

• Standard: Start repaying both principal and interest immediately.
• Graduated: Pay only interest while studying, then repay the full loan after graduation.
• Graduated Plus: Pay only interest while studying and for one year after graduation, then start full repayment.

To apply, you must be at least 17 years old. Applicants under 21 or those who don’t meet income requirements need a joint applicant—an immediate family member aged 21–60 with a minimum annual income of S$24,000.

For a comprehensive list of eligible institutions and detailed application procedures, please refer to the official FRANK by OCBC website.

POSB Further Study Assist

The POSB Further Study Assist helps students fund their further education, whether in Singapore or abroad. Borrowers can access a loan amount of up to 10 times their monthly income, capped at S$160,000, whichever is lower.

The interest rate for the loan is fixed at 4.38% per annum, offering borrowers the option to choose a tenure ranging from one to 10 years. A one-time processing fee of 2.5% of the approved loan amount is deducted upfront when the loan is disbursed.

To qualify for the loan, applicants must be SC or PR, aged between 17 and 65 years at the time of loan maturity, and have a minimum annual gross income of S$18,000.

In certain situations, such as when an applicant is under 21, studying full-time, studying overseas, does not meet the minimum income requirement, or needs a loan amount that exceeds the eligible credit limit, a guarantor is required. The guarantor must be an immediate family member, a SC or PR, aged between 21 and 65 years at the time of loan maturity, and have a minimum annual gross income of S$24,000.

HSBC Personal Loan

The HSBC Personal Line of Credit offers flexible access to extra cash with several benefits and features. You can borrow up to 8 times your monthly salary with a low daily interest rate of 0.06%. This provides flexibility in terms of borrowing, repayment, and interest payments.

To apply, applicants must meet a few eligibility requirements. First, applicants must be between the ages of 21 and 65 years old. For SC and PR, salaried individuals need to have a minimum annual income of S$30,000, while self-employed or commission-based individuals must earn at least S$40,000 annually.

Foreigners who wish to apply must have a minimum annual income of S$40,000 and must also hold a valid employment pass that has been active for at least 6 months.

Using your CPF as an alternative

The CPF Education Loan Scheme allows you to use your Central Provident Fund (CPF) Ordinary Account (OA) savings to pay for your own, your children’s, or your spouse’s subsidised tuition fees at approved educational institutions in Singapore.

Key features:

• Loan coverage: The scheme covers up to 100% of the subsidised tuition fees for full-time undergraduate programmes. It does not cover compulsory miscellaneous fees or hostel fees.
• Eligibility: Available to SC and PRs enrolled in full-time subsidised undergraduate programmes. You can use your own, your spouse’s, or your parents’ CPF savings for the loan.
• Repayment terms: Repayment starts one year after graduation or upon leaving the educational institution, whichever is earlier. The loan must be fully repaid within 12 years. Repayment is made in cash to the lender’s OA; CPF savings cannot be used for repayment.

To apply for the CPF Education Loan, you need to submit your application online through the CPF website before the start of your academic semester. Once approved, the loan amount will be disbursed directly to your educational institution to cover your tuition fees. After graduation, you will repay the loan in cash to the lender’s OA.

Interest begins to accrue once CPF savings are withdrawn from your OA, and the interest rate is based on the OA interest rate, which can change.

For more detailed information and to apply, visit the CPF Education Loan Scheme page. Please note that loan terms and conditions may change, so it is advisable to check the official website or contact your institution’s financial aid office for the most up-to-date information.

Read more: Best Education Loans for University Students in Singapore

Digital tools for loan management

Managing student loans effectively is crucial for your financial well-being. In Singapore, there are various digital tools and resources available to help you budget, track expenses, and plan your loan repayments. Here are some options to consider:

FinAid

For years, FinAid.org has been helping students and families with information on all aspects of financial aid. It offers tools for calculating college costs, loan payments, savings, and the Expected Family Contribution (EFC).

Edvisors

Edvisors provides an interactive website for families and students, offering advice on a wide range of financial aid topics. These include planning for college, cutting costs, filing the Free Application for Federal Student Aid (FAFSA), winning scholarships, managing payments, borrowing for college, and understanding student loans.

CashCourse.org

The National Endowment for Financial Education (NEFE) offers a valuable resource for student financial literacy through CashCourse.org. This non-profit foundation is dedicated to educating individuals on various financial topics and empowering them to make informed decisions to achieve their financial goals. CashCourse.org is a great tool for students, addressing many common financial challenges they may face during their college years.

Practical Money Skills

Practical Money Skills, created by Visa, offers a range of helpful resources for users of all ages. The site features articles, budget planning tools, games, apps, videos, and calculators, all designed to help individuals learn about and improve their financial literacy.

MoneySkill.org

MoneySKILL is a free, online, reality-based personal finance course developed by the AFSA Education Foundation. It’s designed for young adults, particularly high school and college students, who graduate without a solid understanding of money management fundamentals.

By leveraging these digital tools and resources, you can gain better control over your finances, make informed decisions about student loans, and work towards achieving financial stability.

Practical tips for saving money as a student

Saving money as a student requires discipline, but there are many ways to stretch your budget. Here are some practical tips to help you live frugally:

Use student discounts

Take advantage of student discounts available at retailers, bookstores, cafes, and even for online services. Always carry your student ID or check apps for student pricing on various services.

Avoid impulse purchases

Impulse buying can be tempting, especially with online shopping. Set a monthly budget and stick to it. Before making a purchase, ask yourself if it’s something you truly need or if it’s just an impulse buy.

Read more: Smart Shopping Tips that Reduce Overspending

Cook your own meals

Cooking in batches or meal prepping can save you money in the long run. Buying ingredients in bulk is cheaper than dining out regularly. Many students also join potluck meal groups with friends to share the cost of cooking.

Maximise campus facilities

Take advantage of free resources on campus. Many universities offer free activities such as fitness classes, workshops, or seminars. Instead of paying for a gym membership, use the university’s sports facilities.

Share accommodation

Consider sharing accommodation with other students to split rent and utilities. This can significantly reduce living expenses, especially in cities like Singapore, without sacrificing comfort.

How to repay your student loan faster?

Taking a proactive approach to repaying your loan is key to becoming debt-free sooner. Aside from internships and part-time jobs, here are a few other ways to pay off your loan faster:

Refinance your loan

If you have multiple loans or a private loan with a high interest rate, consider refinancing. This could lower your interest rate, meaning you’ll pay less overall and have more to put toward your loan.

Set up automatic payments

Automatic payments can help you stay on track. Many lenders offer discounts to borrowers who set this up. It ensures your payments are made on time and takes away the worry of remembering due dates.

Pay more than the minimum

If you’re on a minimum repayment plan, try to pay more than the required amount each month. Even an extra S$50 to S$100 can add up over time and help reduce the total interest you pay.

Alternative ways to fund your education

There are other creative ways to fund your education without taking on excessive debt:

1. Crowdfunding your education

Although it may feel unusual, some students have successfully raised money for their education through crowdfunding platforms. Websites like GoFundMe or LaunchGood allow you to tell your story and request donations from family, friends, or even strangers who support your education. Be honest about your financial needs and keep donors updated regularly.

2. Work-study programs

Many universities offer work-study programs, where you can work part-time on campus in exchange for financial aid or tuition discounts. These jobs are flexible and designed to fit around your studies, making them a good option to earn money without affecting your academic schedule.

3. Employer education assistance

If you already have a part-time or full-time job while studying, check if your employer offers education assistance programs. Some companies partner with universities or offer financial support for employees taking courses related to their job. This can help reduce your education costs while gaining valuable experience.

Managing student loans for a debt-free future

Effectively managing student loans is key to graduating without a financial burden. Explore all available options, such as government loans, using your parents’ CPF, or bank loans. Make use of digital tools to track repayments, create a budget, and stay organised. Look into scholarships, part-time jobs, and ways to live more affordably to save money. Paying more than the minimum on your loan can help you pay it off faster, and consider refinancing or seeking government support if needed.

Student loans provide access to higher education, allowing students from all financial backgrounds to pursue their academic and career goals. However, it’s essential to borrow only what you need and fully understand the repayment terms to ensure sound financial planning in the long run. By planning ahead and staying proactive, you can minimise debt and set yourself up for a successful financial future.