For most of us, education loan is one thing we can’t run from when trying to further our education especially in this “paper-laden” society where it is almost-mandatory to have a university degree.
Whether you are a local university student looking to fund your remaining 10% of your university fees or you are looking to widen your options or to fast track your route with a private university either locally or overseas.
Here Are The Best Education Loan for University Students 2018
| Features | Best Education Loan |
|---|---|
| Cheapest for Local University | Option 1: OCBC FRANK Option 2 and 3: RHB and Maybank |
| Cheapest for Overseas University | Option 1: OCBC FRANK Option 2: POSB Bank |
| Best for Part-time Students (Local) | Option 1: Maybank Option 2: POSB Bank |
The Cost Of Education Loans
Taking up a loan isn’t as easy as borrowing a dollar and return that same dollar back. The bank ought to earn something from loaning you money after all.
How so? You might ask. Through the interest on loan and the processing fee.
These are your costs. With that, let’s compare them across the education loans by the banks.
Assuming the loan taken up has,
- Loan Amount: S$20,000
- Loan Tenure: 6 years / 72 months
| Banks | POSB Bank | POSB Bank - Preferred Institution | OCBC FRANK | RHB/ Maybank - Local Institutions | RHB/ Maybank - Overseas Institutions | CIMB |
|---|---|---|---|---|---|---|
| Processing Fee (A) | 3% | 3% | 2.5% | 2% | 2% | 2% |
| 600 | 600 | 500 | 400 | 400 | 400 | |
| Interest Rate (p.a.) | 5.88% | 4.6% | 4.5% | 4.78% | 4.88% | 5.39% |
| Monthly Repayment (B) | 330 | 318 | 317 | 320 | 321 | 326 |
| Total Cost (S$) (A + 72B) - C | 4,384 | 3,496 | 3,359 | 3,440 | 3,512 | 3,872 |
*Note: RHB and Maybank has the same costs for both Local and Overseas Institution.
Cheapest Education Loan – Local Institutions
Based from the calculation above, the education loan with the lowest total cost required are
- Option 1: OCBC FRANK Education Loan
- Option 2 and 3: RHB and Maybank
| Option 1: OCBC FRANK Education Loan | Option 2 or 3: RHB Monthly Rest Education Loan | Option 2 or 3: Maybank Education Loan |
|
|---|---|---|---|
| Processing Fee | 2.5% | 2% | 2% |
| Interest Rate (p.a.) | 4.5% | 4.78% | 4.78% |
| Max. Tenure | 8 years | 10 years | 10 years |
| Min. Loan | S$1,000 | S$3,000 | S$5,000 |
| Max. Loan | 10X your monthly income capped at S$150,000 | 6X your monthly income capped at S$100,000 | 8X your monthly income capped at S$200,000 |
| Late Payment Fee | S$50 | 10.7% | 3% (min. S$30) |
| Early Repayment Fee | 1% of loan prepaid | 1% of loan prepaid | 1% of loan prepaid |
Cheapest Education Loan – Overseas Institutions
- Option 1: OCBC FRANK Education Loan
- Option 2: POSB Further Study Assist
| Option 1: OCBC FRANK Education Loan | Option 2: POSB Further Study Assist |
|
|---|---|---|
| Interest Rate (p.a.) | 4.5% | 5.88% / 4.6% (preferred institutions) |
| Max. Tenure | 8 years | 5 years / 10 years (preferred institutions) |
| Min. Loan | S$1,000 | S$2,000 |
| Max. Loan | 10X your monthly income capped at S$150,000 | 6X your monthly income capped at S$80,000 |
| Late Payment Fee | S$50 | S$30 |
| Early Repayment Fee | 1% of loan prepaid | Nil |
| Additional Requirement | ||
| Annual Income Required for Guarantor | S$24,000 | S$24,000 |
| Applicant Age | 17 and above | 17 and above |
Cheapest Education Loan for Part-time Students
Working and studying part-time is very taxing in itself, yet with all these loan requirements to fulfil can be a huge headache.
Low Minimum Income Required
Here are some education loans with a low minimum income required for part-time students you can consider:
- Maybank Education Loan
- POSB Further Study Assist
| Option 1: Maybank Education Loan | Option 2: POSB Further Study Assist |
|
|---|---|---|
| Interest Rate (p.a.) | 4.78% (local) / 4.88% (overseas) | 5.88% / 4.6% (preferred institutions) |
| Max. Tenure | 10 years | 5 years / 10 years (preferred institutions) |
| Min. Loan | S$5,000 | S$2,000 |
| Max. Loan | 8X your monthly income capped at S$200,000 | 6X your monthly income capped at S$80,000 |
| Late Payment Fee | 3% (min. S$30) | S$30 |
| Early Repayment Fee | 1% of loan prepaid | Nil |
| Requirement for Applicant | ||
| Annual Income Required | S$18,000 | S$18,000 |
| Applicant Age | 18 and above | 21 and above |
Maybank does offer the cheapest loan available with a low minimum income requirement. However, if you are enrolling in POSB’s preferred institutions, POSB Further Study Assist would be a better choice.
Both of which has an income requirement of S$18,000 for the applicant, which amounts to S$1,500/month.
Repayment Methods
There are banks that provide various methods of repayment to better fit your current financial situation.
- If you are tight on cash while pursuing your studies, RHB allows you to defer you payment until upon graduation.
- All three banks allow you to pay interest only while you are studying, and continue your monthly instalment upon graduation.
| OCBC FRANK Education Loan | RHB Monthly Rest Education Loan | Maybank Education Loan | |
|---|---|---|---|
| Repayment Methods | 1. Standard Monthly instalments = Principal + Interest, once your loan is disbursed. | 1. Standard Monthly instalments = Principal + Interest, once your loan is disbursed. | 1. Standard Monthly instalments = Principal + Interest, once your loan is disbursed. |
| 2. Graduated While Studying: Pay Interest Only Upon Graduation: Monthly instalments = Principal + Interest | 2. Graduated While Studying: Pay Interest Only Upon Graduation: Monthly instalments = Principal + Interest | 2. Partial Repayment While Studying (or up to 3 years whichever is earlier): Pay partial instalments Thereafter: Monthly instalments = Principal + Interest |
|
| 3. Graduated Plus While Studying + 1 year after Graduation: Pay Interest Only Third Year Onwards: Monthly instalments = Principal + Interest | 3. Deferred (for full-time local study only) While Studying: No payment required Upon Graduation: Monthly instalments = Principal + Interest | 3. Interest Servicing While Studying (or up to 3 years whichever is earlier): Pay only interest Thereafter: Monthly instalments = Principal + Interest |
|
| NOTE: For Graduated and Graduated Plus, the loan tenure includes the period of study. |
Other Alternatives
- Using Parents’ CPF
- Tuition Fee Loan
- Interest-free Instalments with your Credit Cards
Of course if you are not in a hurry to get your degree, you can start by working for a few years and saving up to further your education!
We hope that this article will aid you to choose the education loan that will benefit you and your financial situation the most. Knowing that you will have to spend some time of your career clearing your student loan debt, it is important to ensure that you have chose the most cost-effective scheme for yourself.
If you do encounter any scenarios, do share with us on the Seedly Community platform where our Community will gather to help you in your situation. (Don’t worry, you can choose to remain anonymous too!)
