A good university education, whether in Singapore or overseas, pays dividends in the long term. But in the short term, this investment does not come cheap. Learn more about the best education loans in Singapore and find out which option is the best for you and your parents’ wallet.
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.
In this article, we’ll cover the following:
- What is an education loan in Singapore?
- Best education loans in Singapore 2022
- Which bank has the best education loan?
- Which bank has the lowest interest rate for an education loan in Singapore?
- How much loan can I get from the bank for an education loan?
- Do you qualify for the CPF Education Loan Scheme?
- Do you qualify for the MOE Tuition Fee Loan?
- Which education loan should you choose?
- What if you cannot repay your loan?
What is an education loan in Singapore?
An education loan, aka student loan or study loan, is a loan designed for students to pay for the cost of their post-secondary education.
Best education loans in Singapore 2022
|Best For||Education Loan||Benefits|
|Highest loan amount||Maybank Monthly Rest Education Loan||Maximum loan of S$200,000|
|Cheapest loan & flexible repayment||POSB Further Study Assist||4.38% p.a. |
No early repayment fees, low late penalty fee
|Low processing fee||CIMB Education Loan||Relatively low processing fee at 2% of loan amount|
|Students studying locally or overseas||OCBC FRANK Education Loan||Most extensive list of eligible local private & overseas institutions|
Best for highest loan amount: Maybank Monthly Rest Education Loan
If you need a high loan amount to study abroad at a prestigious university, or get your Masters, Maybank’s Monthly Rest Education Loan has got you covered.
It offers a maximum loan amount of up to S$200,000, or eight times the borrower’s monthly income, making it a great choice for those that require a large study loan. Most education loans come with a limit of S$80,000 to S$150,000.
Processing fee payable is 2% of loan amount and part-time students who are earning at least S$18,000 annually are eligible to apply as principal. Maybank also offers three flexible loan repayment schemes for you to choose from: (i) Interest Servicing Scheme; (ii) Partial Repayment Scheme; and (iii) Standard Repayment Scheme.
Maybank’s education loan comes with a tenure of up to 10 years, and charges an attractive interest rate from 4.45% p.a. for both local and overseas studies.
For those who require extra financing for education-related expenses such as accommodation fees, computer equipment, books, Maybank has you covered, too.
Best for cheapest loan & low penalty fees: POSB Further Study Assist
If you are expecting to settle your loan in full earlier, POSB Further Study Assist offers the lowest penalty fee.
It does not charge a penalty fee for early repayment of the loan, when other banks may charge about 1% on the prepaid amount. This is great for those who don’t fancy being locked in to the entire loan tenure. For example, if you manage to land a high paying job upon graduation, you could rid yourself of debt early to avoid further interest expense.
Students opting to study at any one of the approved institutions will be thrilled to know that the POSB Further Study Assist offers an interest rate of 4.38% p.a. at the moment — the lowest in the market. That said, remember to factor in the 2.5% processing fee when doing the sums to determine the cheapest loan option for you!
The interest rates offered by POSB’s education loan works on a diminishing balance rate basis instead of a flat rate. This means the interest rate is calculated every month based on the outstanding loan amount.
POSB Further Study Assist comes with a maximum loan limit of S$160,000 or 10 times your monthly income.
Best for low processing fees: CIMB Education Loan
Students looking to enrol in ‘higher end’ courses and maximise their education would do well to consider the CIMB Education Loan. Aside from a high loan quantum of S$200,000, it has one of the lowest processing fees at 2% of the loan amount – all without hidden costs and fees.
CIMB’s education loan is also versatile in that students can choose between standard and interest servicing schemes; the latter only requires students to pay just the interest during the course of study, with the principal amount (with interest) payable after graduation.
The maximum loan tenure is 10 years, which is slightly higher than its counterparts in the education loans market. Weigh your options carefully as you may end up forking out a lot more in interest for longer tenures.
Best for students studying locally or overseas: OCBC FRANK Education Loan
If you want to study with the assurance that you won’t be burdened with exorbitant interest rates even though your school isn’t one of the most mainstream ones out there, the OCBC FRANK Education Loan should garner your interest.
The OCBC FRANK Education Loan is available to students studying locally or overseas. Its lists of approved local private institutions and overseas institutions are super extensive. It also helps that the OCBC FRANK Education Loan offers a decent interest rate of 4.5% p.a. for both local and overseas studies.
The loan also offers three flexible payment options: standard repayment (pay monthly instalments of principal plus interest as soon as your loan is disbursed), graduated repayment (pay only interest while studying with the rest after graduation) and Graduated Plus (pay only the interest over the course of your studies until one year after graduation).
The OCBC FRANK Education Loan has a processing fee of 2.5%. The maximum loan amount is capped at S$150,000, for loan tenures between one and eight years.
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.
Which bank has the lowest interest rate for an education loan in Singapore?
At this time, POSB Further Study Assist offers the lowest interest rate at 4.38% p.a. with a 2.5% processing fee. As interest rates may change without notice, it is best that you compare education loans before settling on one that suits your needs most. While you’re at it, be sure to consider each loan’s processing fees and other miscellaneous charges, if any.
How much loan can I get from the bank for an education loan?
The maximum amount you can borrow from the bank depends on your monthly income, the monthly income of your guarantor or the combined monthly income of you and your guarantor.
At the moment, banks in Singapore let you borrow a maximum of S$150,000 to S$200,000 for an education loan, or up to 8X or 10X the monthly income considered.
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)
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.
Read these next:
CPF Education Loan: How Much CPF Funds Can You Use?
4 Tips For University Graduates To Clear Tuition Fee Loans Quickly
When To Use A Personal Loan For Education
What Really Happens If You Skip Credit Card Bills, Loan & BNPL Payments
A Cost Guide To School Fees In Singapore: Primary, Secondary, Post-Secondary and Tertiary