Describe how your type of study funding is repaid and what it costs you.
Ask a first jobber what they owe for their studies and the answer is often vague. Most answers fall into three groups. Some people give a rough guess at the amount, such as "around twenty thousand" (an invented example, like every figure in these notes). Some don't know because their parents paid. Some only know that the bank sends a letter now and then.
You can't plan repayment from any of those answers. The two main kinds of study funding in Singapore are a bank study loan and the CPF Education Scheme, and they are repaid on very different terms. Start by finding out which kind you have and what its terms are.
A bank study loan is either a loan from a bank or a tuition fee loan that a bank administers. It works like any other loan. The agreement you signed sets the interest rate, the date repayment starts and the repayment period. You pay a fixed monthly amount until the balance is cleared.
All the details that matter are in that agreement, and they differ from loan to loan. Check four things:
Is the rate fixed, or can it change? Does interest build up while you study, or only from a set date? When is the first repayment due, and for how many months? Is there a fee for paying early?
Your own agreement and the lender's latest statement are the only reliable sources for these answers.
Arjun is a first jobber in the third group. He set up a direct debit in a hurry, and since then he has only known that the bank sometimes sends a letter. When he digs out his paperwork, he finds he owes S$20,000 at 4.5% a year over five years, which works out to about S$372.86 a month. His repayments started in January. He had been paying every month without ever knowing the rate.
The CPF Education Loan Scheme, which these notes call the CPF Education Scheme, lets CPF Ordinary Account savings pay for your studies if you are a Singapore Citizen or Permanent Resident enrolled in a full-time subsidised diploma or degree course at an approved educational institution in Singapore. The savings can be the student's own. For most students they come from a parent's Ordinary Account, because the student has not yet built up any CPF.
The money is not a gift from CPF. As the student, you must repay the amount used, plus interest, back into the account it came from. The CPF Board sets the terms: the interest rate, when repayment starts after your studies finish, the longest repayment period allowed, and how the monthly amount is worked out. These terms are published on cpf.gov.sg, and you can log in there and go to the Education dashboard to see your own loan information, such as the outstanding loan amount, the accrued interest repayable, the monthly instalment amount and any total arrears. Check your own terms there rather than relying on a friend's or sibling's schedule.
Hui Min is in the second group. Her mother used CPF to pay her university fees, and Hui Min has only a vague sense that she is supposed to pay it back.
With a bank loan, you owe the bank. The interest is the bank's charge for lending to you, and every extra month you take to repay costs you money directly. The repayment terms are whatever the bank set in your agreement.
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. The longer you take, the longer her account is short of money that would otherwise be earning interest there. The repayment terms are the standard ones set by the CPF Board. Lesson 5.2, "Repaying the CPF Education Scheme, including into a parent's account", explains why the source account changes how you should think about repaying it.
The rule for this module is that you need your own figures, from your own documents, before you decide anything.
Before you can plan repayment, list everything you owe for your studies. Give each debt its own row, 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. For a bank loan, also note your answers to the four questions above.
Add a separate row for any debt that is easy to forget, such as a polytechnic loan or fees a relative paid and expects back.
Arjun's row is complete: bank, S$20,000, 4.5% a year, started January, S$372.86 a month, five years. So far, Hui Min's row reads: CPF Education Scheme, owed to her mother's Ordinary Account, balance about S$20,000. Her rate, start date and monthly amount are blank because she has not yet logged in to cpf.gov.sg to check her loan information.
Fill in any blanks from your own documents before you make any repayment decision. Everything you need is in papers you already have or can get in a few minutes: the loan agreement, the lender's latest statement, or the loan information on the Education dashboard at cpf.gov.sg.
Get out your loan agreement or CPF Education Scheme statement and write one line for each education debt you have.
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