Cost Comparison of Education Loans
The graph below provides a cost comparison of international education loans. The graph displays the total cost of each loan, which includes all interest payments and processing fees. For the purposes of comparison, we assume that a S$25,000 loan is taken out for 6 years and that monthly payments are made on-time.
Cheapest Student Loan for International Studies: OCBC FRANK Education Loan
|OCBC FRANK Education Loan|
|Max Principal||S$150,000 or 10x monthly income of guarantor|
|Annual Income Requirement of Guarantor||S$24,000|
OCBC's FRANK Education Loan, which is also a great option for students that study locally, is the cheapest education loan for students that study overseas. The bank charges the lowest interest rate in the market at 4.5% and a reasonable processing fee of 2.5%. OCBC's study loan is also particularly attractive to students going overseas as it allows borrowers to obtain sizeable loans of up to S$150,000 or 10 times their (or their guarantor's) monthly income.
Best Student Loan Promotion for Overseas Study: Maybank Education Loan
|Maybank Education Loan|
|Max Principal||S$200,000 or 8x monthly income of guarantor|
|Annual Income Requirement of Guarantor||S$30,000|
|Promotional rates listed, available until April 30, 2020|
Maybank's current education loan promotion makes it a great option for all students. With interest rates of 4.45% p.a. and a processing fee of 2%, it is the best promotion available. It's also a great option for borrowers that require very large loans as it allows students to borrow the largest loans of up to $200,000 or 8 times their guarantor's monthly income. This allows individuals that earn more than S$225,000 to obtain larger loans through Maybank compared to OCBC, which allows borrowers to obtain loans of S$150,000 or 10 times their monthly income.
Best Interest-Only Student Loan: OCBC FRANK Education Loan - Graduated
|Loan of S$25,000 over 6 Years||OCBC FRANK - Standard||OCBC FRANK - Graduated||OCBC FRANK - Graduated Plus|
|Monthly instalment During School||S$397||S$94||S$94|
|Monthly instalment After School||S$397||S$1,091||S$2,134|
OCBC's FRANK Education Loan is the cheapest interest-only education loan. It offers the lowest interest rate of 4.5% and a reasonable processing fee of 2.5%. Additionally, it extends the interest-only period to up to 4 years. OCBC calls this repayment program Graduated. OCBC FRANK Education Loan also comes with a Graduated Plus program that extends the interest-only period to 5 years. Besides the method of repayment, other terms are identical to the standard payment option we mentioned above. Below is a demonstration of how monthly payments and total cost differ for standard option and interest-only option.
Honorable Mention: RHB Education Loan
|RHB Education Loan|
|Max Principal||4x monthly income, 6x monthly income or S$120,000 if annual income is greater than S$120,000 or net assets exceed S$2M|
|Annual Income Requirement of Guarantor||S$30,000|
While OCBC and Maybank stand out as the best options for students seeking loans to study overseas, RHB is another good option for students that require loans to finance their education. In fact, RHB offers the same low interest rates and processing fee as Maybank for standard and interest-only loans. However, there are a few reasons that Maybank's loans are preferable to RHB's. First, Maybank offers large loans than RHB. It also offers loans to students with guarantors that earn at least S$24,000 annually, which is less than RHB's income requirement of S$30,000. With this said, RHB may be suitable backup option for borrowers that are unable to obtain loans from OCBC or Maybank.
Our Picks For the Best Education Loans for International Studies
There are two general categories of education loans: standard payment and deferred payment. Education loans with standard payment structures require students to make equal payments throughout the duration of the loan. On the other hand, interest-first (or interest-only) study loans allow students to make smaller payments while they are in school. With that said, interest-only loans are typically more expensive over the entire tenure of the loan.
Our Picks for the Best Standard Repayment Study Loans
Standard repayment education loans are a good option for students that have enough funds to begin making loan payments while they are still in school. This is because these loans tend to be cheaper over the long-run, compared to deferred-interest or interest-first loans. The table below highlights the most affordable education loans with standard repayment structures.
|Education Loans - Standard Payment||Processing Fee||Interest Rate During School||Interest Rate After School||Monthly Instalment During School||Monthly Instalment After School||Total cost|
|CIMB Education Loan||2%||5.39%||5.39%||S$407||S$407||S$4,816|
|OCBC FRANK Education Loan||2.5%||4.50%||4.50%||S$397||S$397||S$4,198|
|POSB Further Study Assist||3%||5.88%||5.88%||S$413||S$413||S$5,479|
|Maybank Education Loan - Overseas Studies||2%||4.45%||4.45%||S$396||S$396||S$3,532|
|RHB Education Loan - Overseas||2%||4.88%||4.88%||S$401||S$401||S$4,389|
Best Interest-Only Education Loan for Studying Overseas
While some students will be able to begin paying off their loans while they study, many will not be able to handle the financial burden until after they complete their studies. For students that would prefer to make smaller repayments during school, there are "interest-only" loans that allow them to only pay interest until they've completed their studies. However, this does require borrowers to pay more over the lifetime of their loans. Below are the best options for interest-first loans for international study. The table below assumes a loan of S$25,000 over a 6 year tenure with 4-year interest-only period.
|Education Loans - Interest Servicing||Processing Fee||Interest Rate During School||Interest Rate After School||Monthly Instalment During School||Monthly Instalment After School||Total cost|
|CIMB Education Loan - Interest Servicing Repayment||2%||5.99%||5.39%||S$125||S$1,101||S$7,918|
|OCBC FRANK Education Loan - Graduated||2.5%||4.50%||4.50%||S$94||S$1,091||S$6,314|
|OCBC FRANK Education Loan - Graduated Plus||2.5%||4.50%||4.50%||S$94||S$2,134||S$6,864|
|RHB Education Loan - Graduated||2%||4.88%||4.88%||S$102||S$1,094||S$6,644|
|RHB Education Loan - Deferred||2%||4.88%||4.88%||S$0||S$1,324||S$7,278|