Student Loans in Singapore
Known to host some of the best universities across the world, Singapore is considered to be a student favored destination. Whether you are looking to enroll in an international or local university, the Singaporean education system ranks as one of the best in the world.
However, parameters have now switched from just quality education to what the whole country can contribute for the student. Singapore government takes education matters seriously, which can be clearly seen through the modern infrastructure that is perfectly blended with the quality education.
Students in Singapore believe in education as a stepping stone to a lucrative income in a promising career. However, the education system in Singapore is quite expensive—the same reason it’s ranked among the best.
Parents wishing to enroll their children in universities have to part with some outstanding amount of money. Even the most economical – local public university command a 5-figure sum to acquire a degree the bare minimum.
The best part is that however broke you may be; there are specific loans generated to cater for students who may not afford the college fees. For instance, if you’re a working student, you don’t have to spend all your income on fees.
Many schools offer financial assistance to help students bear with the staggering tuition fees, living expenses, and books. Every school has its own eligibility requirements for the same. In case you are ineligible, you can try and access the loans from Singapore banks or other financial institutions.
Unlike other types of loans such as mortgages and personal loans, education loans are typically more flexible and offer various repayment options. This kind of loan generally has a lower interest rate than other public loans. Thinking of getting a student loan for your education? Here are some of the things to keep in mind.
You may not qualify for a student loan if you are under 21 years unless you have a guarantor. Most education loans from financial institutions and banks need the student to be between 21 to 60 years. The banks just need the assurance that you will manage to pay them back once you get a job. If you’re younger than 21 years, your guarantor will step up for you and will be held responsible if you do not pay.
You will be required to pick someone who is financially stable and willing to sign up for the loan. This a person could be your parent, guardian, spouse, sibling or relative. The eligible guarantor should have a minimum income of between SGD 24,000 and SGD 30,000 based on the terms.
If you happen to be older than 60 years, you will have to agree to take shorter loan repayments duration for you to be eligible. The banks may need to go through your income to decide whether you are capable of paying back or not.
As we have mentioned above, banks pay a lot of attention to income—it is what gives them assurance that you’re capable of paying back what you owe them. Supposing you are looking to enroll in a part-time course, you will need to reach a minimum income threshold of SGD 18,000 to qualify for an education loan.
However, if you have not qualified to earn such amount of money per month, you may appoint a guarantor to help you push through with the loan or find another job that will top up the amount according to the bank’s wishes.
Typically, local banks allow one to borrow money up to 8 times their monthly salaries. For instance, if you earn SGD 20,000 per month, you can qualify for a loan up to SGD 160,000. The same principle applies to individuals with guarantors.
The interest rate
It is imperative for you to do some thorough research and find out which banks or financial institution offers the lowest rates. Remember that the lower the interest rates, the more lucrative the loan is for you. Also, take note if the rate is reduced over the life of a loan month or it’s a flat rate.
If it’s a flat rate, the bank will demand a fixed amount of interest from the very beginning which is calculated based on your loan amount and the interest rate. In this case, the interest will remain the same irrespective of the outstanding balance of the loan.
In the monthly reducing interest plan, the interest is calculated based on how much is remaining in your loan balance. This means that if you pay off the loan quickly, you will pay less interest. If you have a plan on how you will repay the loan, the second option could be best for you, but if you intend to pay the loan after you finish school an find a job, the first option is right for you since you have nothing to lose.
The good thing about student loans is that they charge meager fees. However, banks use a specific technique to lure students into applying for loans from their banks by lowering the interest rate but hiking the processing fee. The high processing fee will compensate for the low-interest rate and vice versa. When doing your research make sure to include the processing fee and include it in your calculations for the whole loan.
There exist various repayment methods that students can choose from based on their financial standing. One of the most popular ways is paying in monthly installments on the loan interest and principal. This could be an ideal method for part-time students who may not be earning much.
Another popular method is paying your loan once you complete school. Some banks such as RHB allow this kind of deferred repayment for local full-time students. This method is most recommended as it enables the full-time students to study continuously till they graduate without having to think about where they are going to find money to repay the loan. However, the trick with the method is that the student will pay a higher monthly installment after they graduate.
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