You will be able to describe how your type of study funding is repaid and what it costs.
Ask a group of first jobbers how much they owe for their studies and you get answers like "around twenty thousand, I think", "my parents paid, I'm not sure how" and "the bank sends a letter sometimes". Hui Min is in the second group. Her mother used CPF to pay her university fees, and Hui Min has a vague sense she is supposed to pay it back. Arjun, with a bank study loan and a direct debit he set up in a hurry, is in the third.
Both of them owe money, on very different terms. This lesson explains how the two main kinds of study funding are repaid and what each one costs, so that you can write down exactly what you owe. The figures are made-up examples.
A bank study loan is a loan from a bank, or a tuition fee loan that a bank administers, and it behaves much like any other loan: the agreement you signed sets an interest rate, a date when repayment starts and a repayment period, and you pay a fixed monthly amount until the balance is cleared.
The details that matter are all in the agreement. Is the rate fixed, or can it change? Does interest build up while you are still studying, or only from a set date? When does the first repayment fall due, and for how many months? Is there a fee for paying early? These differ from loan to loan, so the only reliable source is your own agreement and the latest statement from the lender.
Arjun digs out his paperwork. In example figures, he owes S$20,000 at 4.5% a year, repaid over five years, which works out to about S$372.86 a month. He had been paying it without ever knowing the rate.
The CPF Education Scheme works differently. It lets CPF Ordinary Account savings pay for approved tertiary courses at local institutions. The savings can be your own, but for most students they come from a parent's Ordinary Account, because the student has not yet built up any CPF.
It is not a gift from CPF. The amount used, plus interest, must be repaid by the student, back into the account it came from. The CPF Board sets the interest rate, when repayment starts after you finish your studies, the longest period you can take, and how the monthly amount is worked out. These terms are published on cpf.gov.sg, and your own repayment schedule shows the figures that apply to you. Check them there rather than relying on what someone else's schedule said.
Lesson 5.2, Repaying the CPF Education Scheme, including into a parent's account, explains why the account the money came from changes how you should think about repaying it.
The two kinds of funding differ in who you owe and what the debt is costing someone.
With a bank loan, you owe the bank. The interest is the bank's charge for lending, and every extra month you take costs you money directly. With the CPF Education Scheme, you owe the CPF account the money came from. If that is your mother's Ordinary Account, the interest you repay goes into her savings, and the longer you take, the longer her account is short of money that would otherwise be earning interest there.
The repayment terms also differ. A bank loan has whatever terms the bank set. The CPF scheme has standard terms set by the CPF Board. Either way, the rule for this module is the same: you need your own figures, from your own documents, before you can make any decision.
Before you can plan repayment, list everything you owe for your studies. One row per debt, with six facts: who you owe, the balance today, the interest rate, the date repayment started or will start, the monthly amount, and the date it is due to finish.
Arjun's row reads: bank, S$20,000, 4.5% a year, started January, S$372.86 a month, five years. Hui Min's row is only half filled in so far: CPF Education Scheme, owed to her mother's Ordinary Account, balance about S$20,000 in this example. The rate, start date and monthly amount are still blank, because she has not yet opened the statement. If you find a second debt you had forgotten, such as a polytechnic loan or fees a relative paid and expects back, give it a row of its own.
The facts you need are all in documents you already have, or can get in a few minutes: the loan agreement, the lender's latest statement, or your CPF Education Scheme statement on cpf.gov.sg.
Find your loan agreement or CPF Education Scheme statement and fill in a one-row summary for each education debt.
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