Tertiary Education Study Loan Schemes

Published Date: 15 August 2016 12:00 AM

News Parliamentary Replies

Name and Constituency of Member of Parliament

Ms Denise Phua Lay Peng, Jalan Besar GRC


To ask the Acting Minister for Education (Higher Education and Skills) (a) what is the purpose of the tertiary education study loan schemes; (b) what is the Ministry's response to the recent findings by the Auditor-General's Office on outstanding student loans; (c) what is the Ministry's action plan in response to these findings; and (d) how will the Ministry ensure that it will not over-react and continue to be sensitive to Singaporean tertiary students with valid reasons for delays in their student loan repayments.


1. MOE is committed to ensuring that no Singaporean is denied of an education because of financial reasons. Therefore, for tertiary education, we have provided bursary schemes for students who need additional financial help, and a further layer of student loans comprising two schemes. First, a tuition fee loan which covers up to 90% of the tuition fees at the undergraduate level. Second, a means-tested study loan to cover the remaining fees payable and a modest amount for living expenses. Access to these loans is deliberately made easy to help as many students as possible.

2. So this was never meant to be a commercial operation, but part of our policy to help students with their education, and it serves a social objective. The loans are interest-free during the period of study. For the tuition fee loan, the repayment of principal and interest can commence up to one year after graduation for diploma students, and up to two years after graduation for university students. In addition, we have set the minimum monthly repayment at $100 per loan, with a maximum repayment period of 10 years for diploma students and 20 years for university students.

3. These loan repayment terms represent an intended subsidy from Government. They are made flexible to give students time to settle down in their careers and to lessen their financial burden immediately after graduation. As students earn more over time, many adjust the monthly repayment amounts upwards to pay off their loans more quickly.

4. Notwithstanding, we expect students to be responsible in re-paying their loans. For borrowers who are late in making their loan repayments, there are established processes in place for the banks to follow up with them. The banks will first send reminder letters and make follow-up phone calls. If the delay becomes severe, Letters of Demand may then be sent to the borrower, and the guarantor for the loan alerted.

5. The Auditor-General’s Office has made certain observations on the operation of the student loan schemes. MOE will take action to resolve them. On the review of agency fees payable to the banks, it should not have taken so long. We are already in talks with the institutions and banks, and will get the review done as soon as possible.

6. As the Member pointed out, while we need to enforce the processes to manage loan recovery, there will be cases where we need to exercise some flexibility, especially when the borrowers require more time or face temporary difficulties in repaying their loans on time. This is in line with the spirit and policy intent of the student loan schemes.

7. The main reasons for appeals received by MOE from such borrowers are: (1) they were pursuing further studies and did not have income to pay the loans during their study; (2) they were unemployed or seeking employment; and (3) medical or family reasons, such the borrower or his members falling seriously ill. MOE assesses each of these appeals individually, taking into account their unique circumstances. Many have been granted temporary deferment of payments.

8. The students who were offered deferment do repay their loans over time. Today, of total outstanding loans amount, 2.6% are late in payment. So it is not the case that delay in payment is rampant. 1.4% of loan amount outstanding is in default and deemed unrecoverable – not a high default rate for student loans compared to about 40% in UK and 10-20% in the US. Write-off of loans is considered only as a last resort when the banks have exhausted all efforts to recover them.

9. MOE intends to continue to exercise sensitivity, judgement and compassion in dealing with these cases, to help our students.

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