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Student Loans: What Kinds Are There, and How Do I Graduate Debt-Free?

Most Singaporeans grow up with the belief that a university degree is key to a stable and comfortable life. Many spend tens of thousands on an undergraduate degree, even if it means taking on a student loan to pay off hefty fees.

What is a student loan?

A student loan is a type of loan designed to help students pay for tertiary education, and includes funding for tuition fees and living expenses.

Different types of student loans

There are mainly two types of student loans in Singapore: Government loans and bank loans.

Ministry of Education (MOE) Study Loan

The study loan is open to both polytechnic and university applicants. There are certain requirements applicants have to meet to be eligible, including a gross monthly per capita income of S$2,700 or less for Singapore residents.

The study loan partially covers tuition fees and provides an annual living allowance. If the student’s monthly household per capita income is S$950 or less, the loan is interest-free. Otherwise, interest sets in after the student graduates.

DBS Study Loan

Similarly to the MOE study loan, the DBS Study Loan is open to both polytechnic and university applicants. The study loan is interest-free while the student is in school, and minimum monthly repayment is only S$100.

Applicants have to be tapping on another loan or scholarship to be eligible for the DBS Study Loan.

OCBC Student Loan

OCBC offers study loans to three categories of students: Students enrolled in local public universities; students enrolled in local private or overseas institutions; students enrolled in the National University of Singapore.

The criteria for each loan depends on the school the applicant is studying in.

Maybank Education Loan

The Maybank Education Loan offers an interest rate from 4.45% per annum, lower than most of the other bank study loans. It also provides extra funding for education-related expenses such as accommodation fees and computer fees.

However, full-time students need to have a minimum S$18,000 annual income, and part-time students a S$30,000 annual income.

Other ways to fund your education

Besides student loans, applying for bursaries and scholarships are other ways to pay for school.

Bursary

A bursary is a financial award offered by MOE. Though bursaries are not huge, they do not require the applicant to repay the money and are bond-free.

Bursaries are provided to lower-income applicants and come with a per capita income criteria.

Scholarship

Like bursaries, scholarships do not have to be repaid. But some come with bonds that require a successful applicant to work for the organisation for a period of time after he or she graduates.

Many organisations provide scholarships. These include the Singapore government, the universities themselves, third-party scholarships groups, and companies.

Scholarships are usually offered based on academic or other merits. Most scholarships cover partial or full tuition fees, with extra funds for living expenses.

Websites such as BrightSparks list the scholarships available in Singapore.

How to repay student loan

If you have to take up a student loan, here are ways you can try and repay it as soon as possible.

Part-time jobs

Some students who are able to juggle both studies and work take a temporary job while they are in school. The most common part-time jobs are service roles in places like restaurants or cafes. Others provide tutoring services to younger students.

They could also take on ad-hoc work related to a specific skill such as video editing and copywriting.

Internships

Most students take on at least one full-time or part-time internship during their studies. Full-time internships usually require students to work three to six months full-time, meaning they have to take time off from school. Part-time internships usually require students to work two to three days a week for a couple of hours each day, and students can do them while studying.

Doing internships are a great way to earn side income and build a portfolio at the same time.

Savings

Another source of income can be setting aside some money from a monthly allowance. This pool of money will accumulate over months, which could be substantial enough to partially repay your student loan when you graduate.

How to save money as a student

Take public transport

Public transport is the one of the most affordable transport options in Singapore, especially since there are student prices available. Cut down on taking private transport such as taxis and ride-hailing services as the expenses from each ride easily piles up.

Cut down on expensive meals

It may be fun to check all the new cafes around town with your classmates, but a S$20 to S$30 meal every week will burn a hole in your pocket quickly. Why not hang out at the school canteen or a hawker centre instead?

Buy second-hand study materials

Brand new textbooks are really expensive, and you end up using most of these books only once. Second-hand textbooks are a much more practical way of getting your class materials. You could even borrow some textbooks from the school library if there are many copies available.

Can I repay my student loan before graduation?

Yes, you can be debt-free even before starting your career with careful financial planning and applying for as many grants as available.

Even if you are not able to finish paying off your loans before stepping into the working world, do not fret. Every person’s journey is different and most people find a decent-paying job after graduating.

If you need help in calculating how to manage a student loan on your budget, download our personal mobile financial advisor app here.

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