Paying for higher education in Singapore can be a financial burden for many students. While scholarships and grants may provide some financial assistance, they may not be enough to cover the full cost of tuition and other related expenses. This is where study loans come in. 

A study loan is specifically designed to help students finance their education. This article will discuss how study loans work in Singapore, including the types available, what to consider when taking out a loan, and the repayment process.

What Is A Study Loan?

A study loan is a type of financial aid given to students to assist them in covering their educational costs, such as tuition, books, and other expenses. Loans for study purposes and needs fall under the category of exempt loans. Regardless of their financial situation, these loans for students are intended to assist students in achieving their educational objectives. You can get a study loan in Singapore from various places, including banks, financial institutions, and governmental organisations.

Singapore’s study loans have interest rates that are comparatively lesser than those of other loans, like personal loans. The different loans available for students include:

  • MOE Tuition Fee Loan
  • CPF Education Scheme
  • Education Loans from Banks/ Financial Institutions (FIs)

What To Consider When Taking Out A Study Loan

When considering taking out study loans in Singapore, there are several factors that students should consider. These prerequisites will answer the query of how does a study loan work.

Interest Rates And Fees Of The Loan 

Comparing student loan interest rates is essential to ensure you get the best deal. It is also important to consider the processing fees associated with the loan, such as application fees, late payment fees, and prepayment penalties. 


Make sure you meet the eligibility criteria for the loan, such as being a Singapore citizen or permanent resident and having a good credit score.

Repayment Period

Some loans have a longer repayment period, which means lower monthly repayments, but it also means that the overall cost of the loan will be higher. Certain types of loans only require payment of the interest throughout your time in college and the repayment of the principal at some point after completion.

Loan Terms

An education loan typically has a maximum loan term of 8 to 10 years and a minimum of 1 year. With this information, you could plan your finances and estimate how long you would need to repay the loan.

Credit Amount

Establishing the minimum and maximum sum of loans for a student to be eligible to borrow from a bank is crucial. This way, you can determine whether it is adequate to pay for your college costs and whether you will be able to repay it in the future.

The Purpose Of The Loan

A study loan is intended to help students pay for their education expenses. However, it is essential for students to be specific about the purpose of the loan and to ensure that the loan amount is sufficient to cover all of their education expenses. 

The Student’s Financial Situation

A student should clearly understand their current financial situation, including their income, expenses, and any existing debt they may have. The student’s financial situation can also affect their eligibility for certain loan programs. 

For example, the CPF loan and the MOE Tuition Fee Loan are need-based loans, and the eligibility is determined by the student’s family income and financial situation. The student should ensure that they can repay the loan on time and that the loan amount is sufficient to cover their education expenses. 

Eligibility Criteria For CPF Education Scheme

The Central Provident Fund (CPF) Education Scheme is a government-funded loan program that provides financial assistance to Singaporeans to pay for their education. To be eligible for the CPF Education Scheme, students must be Singapore citizens and have a valid CPF account. 

They must also pursue full-time undergraduate studies at an approved institution in Singapore and have a stable income and a good credit score to qualify for the loan. 

They should also be a member of the CPF for at least two years and have sufficient savings in the Ordinary Account to cover the loan amount.

How Does The CPF Education Loan Repayment Work?

Do you have queries on how does a study loan work, especially this one? The CPF education loan repayment of the CPF loan begins two years after the student completes their studies or when the student’s income exceeds a certain threshold, whichever comes first. The loan is repaid through monthly installments deducted from the student’s salary. 

The interest rate for the CPF Education Scheme loan is based on the prevailing CPF interest rate, which is currently 2.5% per annum. The government determines the study loan interest rate, which remains the same throughout the loan repayment period. You can choose to pay the loan in full or in installments. If the loan is paid in full, you will be eligible for a rebate on the interest paid.

What Is The MOE Tuition Fee Loan?

The Ministry of Education (MOE) Tuition Fee Loan is a government-funded loan program providing financial assistance to Singaporeans to pay their tuition fees. The loan is open to Singapore citizens pursuing full-time undergraduate studies at an approved institution in Singapore. 

The loan covers up to 90% of the tuition fees, and the student or their sponsor must pay the remaining 10%. The government determines the interest rate, which is currently at 0%.

The repayment period starts immediately after the student completes their studies or when their income exceeds a certain threshold, whichever comes first. The loan repayment is made through monthly installments, deducted from the student’s income. The MOE Tuition Fee Loan is need-based, and the eligibility is determined by the student’s family income and financial situation. 

Education Loans From Banks Or FIs

How does a study loan work? Students in Singapore have access to education loans in Singapore, from banks and other financial institutions in addition to loan programs funded by the government. Make sure to read through the lender’s requirements online or obtain all the information from one of their offices, depending on where you borrow the loan.

Compared to loans funded by the government, these loans are frequently unsecured and may have higher interest rates. Before applying for a loan, it is crucial to compare the interest rates and terms offered by various loan providers.

Additionally, banks and other financial institutions have their requirements for applicants, including needing a co-signer or loan collateral. Of course, you or a family member must be a Singapore permanent resident and provide income documentation. 

Although international students can also take out loans in Singapore while studying there, the application process and the prerequisites are a little more difficult. To qualify for a loan, students must have a strong credit history and a consistent source of income. These loans come with flexible repayment terms and a longer repayment period.

With A Singapore Study Loan, You Can Further Your Education

A study loan can be a valuable tool to help students finance their education in Singapore. However, it is essential to carefully consider the terms and conditions of the loan. Students should also be aware of the different types of loans available and the eligibility criteria for each. 

Students can make informed decisions by understanding the ins and outs of student loans in Singapore. 

With U Credit, students can confidently secure their financial support to succeed. Apply now and take advantage of our competitive terms and flexible repayment options. 

Frequently Asked Questions

What Is The Maximum Loan Amount That I Can Borrow For My Education?

The maximum loan amount varies depending on the loan program and the student’s financial situation. For example, the CPF Education Scheme loan has a maximum loan amount of $15,000, while the MOE Tuition Fee Loan covers up to 90% of the tuition fees.

What Happens If I Am Unable To Repay The Loan?

If you cannot repay the loan, you should contact the loan provider as soon as possible to discuss your options. Depending on the loan program you may be in.

Can I Apply For Multiple Education Loans?

You can apply for multiple education loans, but it is essential to consider the overall cost and the repayment terms before taking on multiple loans. Also, ensure you can repay the loans on time.

Are There Any Restrictions On How I Can Use The Loan Funds?

The loan funds can only be used for the specific purpose for which the loan was taken out, such as tuition fees and other related education expenses.