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How to choose an overseas education loan that works for you
Overseas study commands a premium. In today’s highly global, interconnected world. It cultivates students who can think globally, adapt to different cultures and work in diverse teams. It also gives them a chance to live independently, while also opening doors for better job opportunities across the globe.
If you’re looking to pursue an overseas education, you can explore ways to lighten the financial burden. Overseas education loans provide students with the resources they need to turn their dream degrees into reality.
Here’s what you need to know about overseas education loans and some of the options available in Singapore.
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Why get an overseas education loan in Singapore (versus self-financing)?
Even if you could afford it out of pocket, taking out an overseas education loan may still be a savvy move, as it allows you to invest or preserve your savings for emergencies or future needs. The easy repayment options offered by such loans can help you better manage your wealth for the long term.
However, you do end up paying more in total in the long run with an overseas education loan. And monthly instalments can strain your budget, especially when you factor in other costs associated with studying abroad, such as accommodation, daily living expenses and miscellaneous costs. Balance these factors against each other before you decide.
How do overseas education loans differ from personal loans in Singapore?
Overseas education loans are specifically designed to cover costs associated with overseas study, such as tuition fees, accommodations, travel and living costs. As such, overseas education loans typically offer larger loan amounts, lower student-friendly rates and longer, more flexible repayment options. While all these factors vary depending on the lender, the typical annual interest rate for an education loan ranges from 1.6% to 5.4%, with some loans deferring interest charges until after graduation.
Meanwhile, personal loans are general loans that can be used for any purpose, such as travel, home improvement or medical bills. These are normally smaller loans with higher interest rates and shorter repayment tenures compared with tailored overseas education loans.
Who is eligible for an overseas education loan?
Eligibility requirements vary depending on the lender, but generally, you should be between 18 and 35 years of age with a solid academic record. You also need to demonstrate admission to a recognised institution for graduate, postgraduate or diplomatic studies. And for full-time programmes, a co-applicant, like a parent or guardian with a stable income and good credit history, is often required. Depending on the loan amount and financial background, some lenders may ask for collateral.
What should I consider when choosing an overseas education loan?
Look at the total cost, interest rates, repayment options and any penalties for early or late payments. Be mindful of how repayment terms affect your monthly budget. Even if tuition fees are lower for exchange programmes, a loan can still help manage living expenses abroad.
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The information provided on this page is for general reference only. DBS’ assistance is limited to banking needs, such as overseas account opening, education loans and international remittances.