Best Education Loans in Singapore (2023)

An education loan (also known as a student loan or study loan) is a loan taken by students to pay for the cost of their post-secondary education. This also includes any additional education-related expenses, such as the cost of accommodation, textbooks and other education materials.

When you take an education loan, you borrow a sum of money from the bank to be paid back within the loan tenure. The repayment comes with interest, with most ranging between 4% and 6% per annum (p.a) and offering tenures between 1 and 10 years.

You will be required to pay off this loan in regular installments throughout the loan tenure. Depending on the flexibility of repayment schemes, you could be starting the repayment the month after approval, or it could be deferred to after graduation.

To qualify for an education loan, you have to:

• Be a Singapore citizen or Permanent Resident
• Be 18 to 60 years old
• Have an income of at least S$18,000 annually (this income requirement differs across banks)

If you do not earn an income, you will require a guarantor to apply for an education loan:

• Your parents or sponsor can apply for the education loan on your behalf
• You can file a joint application with 2 or more sponsors
• Your loan guarantor should have an annual income of at least S$30,000

You can apply for an education loan from any bank in Singapore offering it. Alternatively, you could use a financial comparison site like SingSaver, or under the CPF Education Scheme or the MOE Tuition Fee loan.

You can apply for an education loan when you have the documents required for application, such as your letter of acceptance from the education institution. Upon submission, it will usually take up to a week for the bank to process your application.

Here are the factors for you to consider when choosing an education loan:

• Interest rate: The lower the interest rate, the less you end up paying in interest on top of the principal amount. Do keep in mind that some banks offer lower interest rates but charge higher processing fees.
• Processing fee: Usually a percentage of your loan amount, this is an additional fee you have to pay when the loan is disbursed.
• Loan tenure: How long do you think you will need to pay off the loan? The longer the loan tenure, the higher the interest payment incurred.
• 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 4X to 10X your annual income, or a specific amount such as S$150,000 or S$200,000.
• Early repayment fee: Some banks charge an early repayment fee — usually 1% of the prepaid amount. However, there are education loans such as the POSB Further Study Assist that does away with it.
• When the monthly repayments start: Some banks require you to start paying off your education loan the month after your education loan is approved. Some others allow you to start repayments after you graduate.

Most education loans offered by banks require a minimum loan amount of S$1,000. The maximum amount you can borrow depends on the annual income of your guarantor. For most banks, you can loan up to 8X or S$200,000 (whichever is lower).

No. You will have to confirm your admission before you get an education loan. When applying for an education loan, the bank will request to see your letter of acceptance from the education institution, stating your course, course duration and total course fee before your loan can be approved.

Besides the interest that you have to pay for your education loan, there are additional fees that you could incur. They include:

• Processing fee: 2% - 3%
• Late payment fee: S$30 - S$80
• Early redemption fee: Usually 1% of the prepaid amount

You will need to submit these documents when you apply for an education loan:

• A completed application form signed by the applicant and guarantor (if applicable)
• Your letter of acceptance from the education institution, stating your course, course duration and total course fee
• NRIC of both applicant and guarantor
• Proof of the residential address
• Proof of relationship with guarantor
• For salaried employees: Your latest e-statement of income, or your CPF contribution history for the last 12 months, or your latest Income Tax Notice of Assessment
• For those self-employed: Your latest 2 years of Income Tax Notices of Assessment

You can check out the bank's website for the full list of approved educational institutions.

Currently, OCBC’s Frank Education Loan has an interest rate of 4.5% p.a. You can also do your own comparison of education loans on SingSaver.

You can refer to this article for the best education loans in Singapore 2020.