Ultimate Guide to Education Loan in Singapore

Education Loans | Loans

Whether you are in a dead-end job and want to upgrade yourself or you want to join a course as a full-time student, any studies can cost you nearly S$10,000 a year. Don’t gasp in shock and don’t fret. Education loans can come to the rescue here and you can repay your college fees over a long period of time.

If you are planning to take up an education loan, make sure you read the following details before you apply.

Your Age?

Typically for an education loan in Singapore, you have to be between 21 years – 60 years of age. If you fall outside this bracket, don’t worry you may still be qualified to get a loan. If you are younger than 21-year-old you will require a guarantor, and older than 60-year-old, you will get a shorter loan tenure.

Your Current Income?

If you are looking for part-time courses locally, then typically, your income should be in the range of S$18,000 to S$24,000 yearly. In case you do not make that kind of money, you will need a guarantor for yourself to get the loan approved.

Why a Guarantor?

Banks need an assurance that you will be able to pay back the granted loan. This goes for all types of loans available. If you have a guarantor, it means that the bank has an assurance to get back their money. Choose your guarantor wisely, as if you are not able to repay your loan, then the bank will go after your guarantor.

Eligibility for a Guarantor? 

A guarantor is usually a parent, sibling, or spouse if you are married. Some banks require your guarantor to be an immediate family member. Different banks have their own specific requirements. However, most commonly a guarantor needs to have a yearly income between S$24,000 and S$30,000.

Loan Amount?

Usually, education loans will allow you to borrow between 6 – 8 times the monthly salary of the applicant or the guarantor. If you or your guarantor can show a monthly income of $2,500, that means you will be eligible for a loan amount ranging between $15,000 to $20,000.

Tenure of Education loan?

Usually, education loans have a tenure of 1 to 10 years. You can choose to repay your loan over a longer period of time with affordable monthly payments. However, keep in mind that the longer the tenure, the more interest you pay.

When to start Repaying Education Loan?

Banks have flexible repayment options these days. The most common ones are the following:

• You can pay monthly installments of the principal loan amount along with the interest while you are still studying. Part-time students with decent incomes can go for this option.
• The second choice is where you pay monthly installments of interest while you are still studying. Once, you complete your education then you pay a monthly installment of the principal amount along with the interest. By this method, you pay more interest but this does not burden your monthly financial commitments. Full-time students who do not have an income can choose this option to repay the loan.

Education is one of the best things in life you can invest in. Banks in Singapore offer relatively low-interest rates on education loans, and if you are someone keen on pursuing higher studies it would be a really great idea to begin!

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