Best Education Loan Interest Rates in Singapore 2025

Both TFL and SL are financial assistance programs provided by the Singaporean government to support students from Singapore in funding their higher education. However, they differ in terms of coverage and eligibility. Below is an overview of each type of loan.

• Covers up to 90% of the subsidised tuition fees for Singaporean students attending universities and polytechnics.
• Interest-free throughout the duration of the study.
• Repayment commences after graduation, with interest charged at the average prime rate of DBS, OCBC, and UOB.
• Minimum monthly repayment set at $100.
• Repayment period extends up to 20 years.

• A means-tested loan that covers the remaining 10% or 20% of subsidised tuition fees, depending on household income.
• May also include a living allowance of up to $3,600 per year.
• Interest-free during the study period.
• Repayment starts after graduation, with interest charged at the average prime rate of DBS, OCBC, and UOB.
• Minimum monthly repayment set at $100.
• Repayment period extends up to 10 years.

From course and institution to the loan amount, consider the total cost, including tuition fees, living expenses, books, and any other miscellaneous costs, and borrow only what you need. Keep in mind a loan is not free money; it comes with interest.

Understand the difference between flat vs. reducing balance rates. Flat rates may seem lower, but reducing balance rates often end up being cheaper as you pay interest on the reducing principal amount. In addition, look at the Effective Interest Rate (EIR) for a true comparison as it includes fees and the loan repayment schedule.

Some banks charge a processing fee, while others don't, so check in detail with your preferred bank and note the prepayment penalty if you intend to pay off the loan early, and also, the repayment period required. Longer repayment periods mean smaller monthly instalments but more interest in the long run.

While certain loans allow you a grace period where you don't have to make payments while you're studying, interest may still accrue. Thus, it is important to check with the bank if you can make partial repayments during your study to reduce the overall interest.

Some financial institutions offer promotional rates or subsidies for certain courses or institutions as they may have a collaboration with certain banks that offer special rates to its students. Moreover, you may apply for some government-subsidised loans or financial aid programs if you meet the eligibility criteria. These often come with lower interest rates and more favourable terms.

Look for reviews or ask friends or family about their experiences with the bank or lender and be sure of the lender's reputation and customer service style and speed, as you'll be dealing with them for the duration of your loan.

Some education loans come with insurance to cover unforeseen circumstances like illness or accidents. It helps to be aware of such coverage, understand the terms and decide if it's beneficial for you, as such insurance coverage is usually helpful if it’s part of an overseas education loan where there will be more uncertainty due to your distance away from home.

Consider the potential income you'll earn after completing your course and ensure your future income can comfortably cover your loan repayments as you do not want to end up struggling to pay off a loan which you cannot cope with. If you're unsure, seek advice from a financial advisor such as our MoneySmart’s team of financial experts who can provide personalised advice based on your financial situation and needs.