Find out whether you should take up an Education Loan?
Education Loans | Loans
by Priyadarshini
23 September 2020
A college education is getting expensive by the day. Students now have the option of choosing an education loan to fund their studies. An education loan can be a good way to sponsor your higher studies. If you are a parent or a student and you are looking to apply for an education loan then, read on to know more.
What makes you qualified for an education loan?
First & foremost you have to be at least 21 years old to study and to be able to get a loan. In Singapore, if you are applying for an education loan you have to meet minimum income criteria. Typically, it ranges from S$12,000 to S$30,000. Many students do not have that kind of money to afford education on their own.
Also, keep in mind if you have been jobless for a considerable amount of time and planning to study further, you might have a tough time getting a loan. The minimum income requirement will vary from bank to bank, however, your parents can also apply for an education loan to meet the requirements and sponsor your education.
Rate of Interest
Interest rates change all the time and loan providers will have different loan packages to offer at different times. There is no premium or branded education loan. So, you need to research well, chalk down what your needs are, and totally rely on your personal instincts rather than go by outdated recommendations.
Types of Loan
When we talk about education loans, there are broadly two types – flat rate and monthly rate.
Flat rate: Banks calculate the entire sum (or the sum for a certain number of years) of your interest payments at the start of the loan.
Monthly rest: Banks calculate interest based on reduced balances each month. The monthly rest usually turns out to be cheaper overall than fixed-rate loan packages, but sometimes banks show both rates, so it’s important to find the accurate calculation of the loan package.
Is there a Prepayment Penalty?
There is some prepayment penalty as well. So if you plan to pay off your education loan earlier than expected then the banks can charge you a prepayment penalty. This is because people may try to pay off their education loan earlier to save on interests payable, hence banks levy a penalty charge to claw back on some of the money.
So, if you are student and do not have huge financial funds to support your education, don’t worry!
Research on the various education loan available in Singapore and apply!
