Cash woes? A personal loan to the rescue!

How to Use Personal Loan for Education

Education loans in Singapore usually have lower interest rates than personal loans.According to a study conducted by HSBC Bank in Singapore, about 30% of the parents have taken out a loan in order to fund their child’s education at a university. So, if you are also someone who is planning to take a loan for your child’s education, you may have already considered both the options: education loan and personal loan. While it’s always better to take an education loan, there can be a situation when you don’t qualify for it. It’s in such situations, taking a personal loan could be a good idea.

How Do Personal Loans for Education Work?

Scenario 1:

In case you are a full-time student without a job, you will have to provide a guarantor who is at least 21 years of age and earns a minimum of S$30,000 per year. Once the loan is disbursed, your guarantor will bear the instalment payments till you can contribute. Some banks let you borrow up to 10 times your monthly salary.

Scenario 2:

You can take a personal loan from a bank for your education if you have a part-time job and earn a minimum of S$24,000 to S$30,000 per year. In this case, your minimum instalment amount will be according to the loan amount. If you earn less than the income requirement of the specific loan, then you will have to provide a guarantor.


If your or your guarantor’s salary is S$5,500 per month, then you can borrow up to S$22,000 (4 times more). This amount is enough for studying Accounts at Kaplan, which costs S$21,346.50 for 1.5 years.

What is the Cost of Education in Singapore

This year in March, Economist Intelligence Unit’s Worldwide Cost of Living Survey named Singapore as the world’s most expensive city. Other than real estate and cars, education is fairly expensive in Singapore, starting from primary and secondary education to university education.

The estimated costs of education for all levels are listed below in a table:

Level Course fees
Primary and secondary education Around S$2,136 for 14 years
Junior college S$792 for two years
Polytechnic S$8,700 for three years
Public university Around S$50,000
Private universities Between S$27,750 and S$69,336 for three to four years


If you want to do a course on Arts and Social Sciences from NUS, then the course fee for two semesters in a year is S$8,150. However, if you want to study Dentistry from the same university, then the tuition fee is S$27,400 for a year.

Benefits of Taking a Loan for Education

  • Helps you get that additional degree you want.
  • A post-secondary education helps you earn twice as much as someone who doesn’t have one.
  • It can be used for professional development purposes such as programming boot camps, which can boost your career prospects.

Pros and Cons of Taking a Personal Loan


  • Since they can be used for any purpose, they are perfect to pay for your education.
  • They require fewer documents and are processed faster than other loans.
  • They are very convenient since they don’t require collateral.


  • Interest rates are higher than those of study loans.
  • Most loans have a minimum must-earn salary criterion of S$30,000 p.a.
  • You should have a good credit score.
  • Early repayment of the loan will attract a prepayment/foreclosure charge from most banks.

When to Take a Personal Loan for Education

You can use a personal loan to finance your education when:

  • You Are Non-Eligible for an Education Loan
  • Education loans come with specific eligibility criteria. For starters, you have to be at least 21 years old and earn a minimum of S$24,000 to S$30,000 per year. You must take admission in an institution specified by the bank. If you are unable to fulfil these requirements either in person or through your guarantor, then you can take a personal loan to pay for your education. The key point of taking a personal loan is that you can study at any institution you want. Also, some banks have lower annual income and age requirements.

  • Your Preferred Course is Not Qualified for a Study Loan
  • Once your education loan is approved, the amount will get credited to your institution’s account and not your own bank account. This means that this loan can be used only for courses run by an institution approved by the bank. If the course you want to take up is not provided by a participating educational institution, then your loan application can get rejected. In such cases, a personal loan is an absolute necessity to pay for your preferred study programme.

  • You Have Used Up the Entire Study Loan Amount
  • Before taking up any loan, it is advisable that you figure out exactly how much you’ll need to pay for your education. Education loans have a limit and once you exhaust this limit, you will have to look for an alternative option. Then there may come a point where a certain skill development programme, for example, maybe worth pursuing. If you have used up your study loan limit, you can consider taking a personal loan to pay for such a programme.

  • You Do Not Have SkillsFuture Credits
  • According to SkillsFuture Credit, all Singaporeans aged 25 and above will receive S$500 to spend on eligible SkillsFuture workshops and courses. These credits will never expire and the government will top up the amount from time-to-time. Given the generous starting amount, chances are that these credits alone will not be enough to spend on all the workshops you want to attend. Hence, taking a personal loan can help you pay for your workshop or course fees remaining on that list.

How Much Should You Keep Aside For Your Education in Singapore?

Over the course of your education in Singapore, you should keep aside between S$30,000 and S$85,000, based on the costs today. With time, course fees at universities will rise. Moreover, the cost of education provided in this article are merely estimated costs. You or your parents should try and save for tuition, textbooks, computers, examination fees, and stationery as well.

All said and done, taking a personal loan to finance your education is a good idea if you feel that your future career prospects can be significantly increased. Also be sure of paying off the loan on time, or you will start a career with heavy debt.

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