With the costly expense of international education, tapping into your savings may not be the wisest when you can pay monthly installments with an education loan. If you are considering pursuing your studies abroad, whether that is in the UK, Australia, South Korea, or any other destination, you may be wondering about the student loan options available to you.

Studying abroad offers Singaporeans a transformative experience, fostering a global mindset, enhancing personal development through exposure to diverse cultures and new challenges, and boosting career prospects with a competitive edge in a globalized workforce. While the costs can be substantial, student loans provide a vital pathway to access these opportunities. 

Schemes from both government-backed programmes (like the MOE Tuition Fee Loan with deferred interest) and private banks offer flexible repayment options and competitive interest rates, making an international education more accessible and allowing students to focus on their studies without immediate financial burden.

Student loans in Singapore primarily focus on covering tuition fees, with some government schemes and private bank options extending to cover living expenses or a larger portion of the overall cost of education, especially for overseas studies or private institutions.

Private bank education loans can cover a significant portion or even the full cost of tuition, depending on the specific loan product and the institution. Some can be used more broadly to cover other education-related costs such as accommodation, books, and daily expenses. The maximum loan amount can be substantial (e.g., up to 10 times monthly income or S$150,000 - S$160,000 for some bank loans), allowing for more comprehensive coverage.

Eligibility criteria

Each loan scheme has specific requirements regarding nationality, the type of institution, and sometimes the course of study (full-time, part-time, first degree). Government-backed loans like the MOE Tuition Fee Loan (TFL) and Study Loan (SL) often have income criteria for the student or their household, while private bank loans may have minimum income requirements for the applicant or guarantor. Age limits for both applicants and guarantors are also common.

Guarantor requirements

Guarantors typically need to be Singapore Citizens or Permanent Residents (though some loans accept foreigners for international students), between 21 and 60 years old, and not an undischarged bankrupt. The guarantor should be willing and able to repay the loan if the student defaults. Some loans also have limits on how many other student loans a person can guarantee concurrently.

Loan amount

Some loans primarily cover tuition fees (up to a certain percentage of subsidised fees, or 100% of subsidised fees for CPF). Others, such as the MOE Study Loan and many private bank education loans, can also include a living allowance or cover a broader range of education-related expenses like accommodation, books, and daily costs. For overseas studies, ensure the loan amount is sufficient to cover the significantly higher overall costs, including living expenses and travel.

Repayment structure

Many government-backed loans are interest free during the period of study, with repayment commencing only after graduation or upon securing employment. Private bank loans might offer options like ‘interest-only’ payments during study, or require immediate full repayment.

• Repayment period: Private bank loans often have shorter tenures, ranging from 5 to 10 years. A longer tenure means smaller monthly instalments but typically higher total interest paid over the life of the loan.

• Repayment methods: Loans usually allow for monthly installments or lump-sum repayments. Check for flexibility in making early or larger repayments without penalty, as this can significantly reduce the total interest.

Interest rate and other fees

Understand if the interest rate is a flat rate, calculated on the original loan amount, or a monthly rest rate, (calculated on the reducing balance. The latter usually works out cheaper over time. Always look at the Effective Interest Rate (EIR), which provides a more accurate reflection of the total cost as it includes all fees and the repayment schedule.

Be aware of other charges, such as processing fees, late payment fees, and potential prepayment penalties if you plan to pay off the loan early.

Looking for options to fund your local or overseas education?

• Interest rate: 4.5% p.a. (EIR 5.17% p.a.)

• Max. amount: 10X of monthly income (Or S$150,000, whichever is lower)

• Max. loan tenure: 8 years

• Guarantor required: Yes (If student is below 21 years old, or if the education is overseas)

• Min. income requirement: S$24,000 p.a for joint applications (Or S$12,000 each for applicant and guarantor)

Unlike some MOE-administered loans that are specific to local public universities, the OCBC FRANK Education Loan is also available for those studying at local private institutions or overseas. 

Borrowers have the flexibility to choose from three repayment options, with the Graduated Plus option requiring only interest to be paid while studying and for one year after graduation, before starting to pay off the  principal and interest from the third year onwards. This is particularly suitable for students who anticipate needing more time to secure stable employment after graduation.

• Interest rate: 4.38% p.a

• Max. amount: 10X of monthly income (Or S$160,000, whichever is lower)

• Max. loan tenure: 10 years

• Guarantor required: Yes (For part-time students below 21, all full-time students, overseas studies, and applicants who do not meet the minimum income requirement)

• Min. income requirement: S$18,000 p.a for applicant (S$24,000 for guarantor)

The DBS Further Study Assist is a strong contender for those needing an education loan for private or overseas studies. Its generous loan quantum and flexible repayment tenure are attractive. However, borrowers must be aware of the immediate interest accrual and the upfront processing fee, which increase the overall cost of borrowing. For those aiming to study abroad, this loan can help cover the significantly higher tuition fees and living expenses.

While the DBS Further Study Assist may not have interest-free periods like some MOE loans, it does offer flexibility in repayment. With a maximum repayment period of up to 10 years, it allows for manageable monthly installments, which can be helpful for graduates entering the workforce.

DBS Tuition Fee Loan

• Interest rate: 3-month compounded Singapore Overnight Rate Average (3M SORA) plus 1.5%

• Max. amount: 90% of subsidised tuition fees (For university students only, 75% for polytechnic students)

• Max. loan tenure: 20 years (For university students only, 10 years for polytechnic students)

• Guarantor required: Yes (Age 21 to 60 and must not be a discharged bankrupt)

• Min. income requirement: None

The DBS Tuition Fee Loan is specifically designed for students pursuing subsidised programs at local tertiary institutions, including polytechnics, autonomous universities, and arts institutions. A significant advantage of this loan is that there are no income requirements or age restrictions for the student applicant themselves for most full-time subsidised programs. This makes it accessible to a wide range of students regardless of their family's financial background.

Are financial constraints holding you back from choosing your ideal university? Sometimes, pursuing your dreams can take a toll on your finances, but not when you know various financing options offered by universities.

If you’re planning to study abroad, there are several ways to fund your education without exhausting your savings. Here’s what you can opt for instead.

Merit-based scholarships

A merit-based scholarship is the most sought-after financing option amongst students. Universities, governments, or global organisations grant these scholarships to students with a good academic track record.

Scholarships can easily subsidise the cost of education by about 25 - 50%. In order to get a scholarship, you must have an exceptional academic record and significant extracurricular accomplishments including community work. 

Grants and bursaries

Where scholarships are often merit-based, grants and bursaries are needs-based financial aids. Universities award grants based on an applicant’s socio-economic standing and special considerations for the differently-abled. 

Grants are available to help students overcome financial obstacles. They enable financially disadvantaged students to gain a new perspective in life and gain a foothold in society. 

Personal loans

While specialised education loans are often preferential with lower interest rates and deferred repayment until after graduation, taking a general personal loan for education is an option, especially if you don't qualify for student loan schemes or need to cover expenses beyond tuition. 

Personal loans typically offer quicker disbursement and greater flexibility in how funds are used (e.g., for living expenses, travel, or books), but they generally come with higher interest rates and shorter repayment periods that often begin immediately, potentially increasing your overall financial burden during your studies. Therefore, it's crucial to compare interest rates (specifically the Effective Interest Rate), fees, and repayment terms meticulously before committing to a personal loan for educational purposes.

» More: Compare Personal Loans In Singapore

Working part-time

Working part-time while studying can be a valuable way to offset educational and living costs, gain practical experience, and build a professional network. However, it’s likely that your visa will come with restrictions for part-time work, such as the number of hours you are allowed to work per week.

While it can significantly ease financial pressure, students must carefully balance work commitments with their academic responsibilities to ensure their studies do not suffer.