About to enter university and feeling the excitement? Before you enjoy yourself in the best phase of your life, there are a few things you need to learn about so that you can make the best out of your university life.
Tertiary education will be your largest personal investment at your current age. It can make or break how you go on to do in life, especially if you do not plan your finances well. To help you increase the odds of success, we researched and gathered intelligence on how you can leverage on different payment options to help you afford your tertiary education.
1. Post-Secondary Education Account (PSEA)
For students who have yet to fully utilise your Post-Secondary Education Account (PSEA), you have the option to pay part of your tertiary education tuition fee via your PSEA.
You have to first check whether you have sufficient funds in your PSEA via the PSEA enquiry line. After which, you have to submit an ad-hoc withdrawal form to your school. You should indicate the amount that you would like the school to withdraw from your PSEA. If you do not have sufficient funds in your PSEA, you can utilise the PSEA of up to three siblings to pay for your tuition fees as well.
While the payment is straightforward, the “difficulty” lies in timing your PSEA fund withdrawal application form submission.
According to the official website of the tertiary institutions, students have to submit their PSEA fund withdrawal form before a stipulated deadline in order for their PSEA to be used to pay for tuition fees.
For example, an NUS student has to submit their PSEA fund withdrawal before 18 September 2017 in order to use his/her PSEA fund to pay for his/her semester 2 tuition fee. Students often miss the application deadline as a result of the short application period stipulated by the school.
2. Education loan from CPF Ordinary Account
The other method that you can pay for your tertiary tuition fee is via your parents’ Central Provident Fund (CPF) Ordinary Account. Under the CPF Education Scheme, full-time undergraduates can use your (or your parents’) CPF Ordinary Account to pay for your tuition fees. However, CPF cannot be used to pay for the compulsory miscellaneous fees and hostel fee. According to CPF, the use of relatives or sibling’s CPF will be considered only on a case-by-case basis.
Under CPF’s Education Scheme, you have to begin repayment on the loan one year after graduation or termination of studies, whichever is earlier. Repayment must be made in cash either in one lump sum or via monthly instalment over a maximum of 12 years.
While CPF might sound like a good option, students and parents have to consider that paying for tuition fees via CPF will incur accrual of interest rates. Once Ordinary Account savings are withdrawn to pay for tuition fees to the school, interest on the education loan will start to accumulate. This interest amount is pegged to the Ordinary Account interest rate, which is currently 2.5% p.a. The loan interest on any amount withdrawn to pay for tuition fees to the school will be calculated on a monthly basis.
3. Interest-free tuition fee loan
To encourage students to pursue higher education, Ministry of Education (MOE) has partnered local banks to offer interest-free tuition fee loans. This is available to full-time undergraduates pursuing a degree with local universities, i.e. NTU, NUS, SMU, SUSS, SUTD and SIT.
Through the interest-free tuition fee loan, full-time undergraduates can loan up to 90% of their tuition fee from local banks. The tuition fees will be disbursed by the bank directly to the school whenever it is due. This reduces the hassle that you have to go through to settle your tuition fee payment. Similar to CPF’s Education Scheme, you cannot pay for the compulsory miscellaneous fees or hostel fee using the loan.
Under this scheme, you will not be charged any interest throughout your course of study. Interest will only kick in one month after you have officially graduated from the university. The interest rate will be based on the average prime rate of DBS, OCBC and UOB after you have officially graduated. The prime rate is frequently updated and can be checked via Association of Banks in Singapore (ABS).
Banks are able to offer up to a maximum of 20 years repayment period instead of 12 years. You can repay the loan anytime from immediately after you graduate, but no later than two years after graduation. Loans can be paid either in lump sum or by monthly instalments of at least $100.
4. Use credit cards to pay and earn points or cashbank
Instead of using cash to repay tuition fees, some students choose to pay their tuition fees via credit cards. At first glance, this might seem like a foolish move given the high interest rates that credit cards charge. However, if you dig deeper, it could make a lot of financial sense.
Tuition fees that must be repaid every semester amount to thousands of dollars. If you pay for it via credit card, it entitles you to earn points on your credit cards, be it air miles or reward points.
There are also credit cards that provide cash rebate on all of your credit card spending. This means you get a “discount” on your tuition fees by simply paying for it on your credit card, instead of cash!
There is, however, one big caveat: You need to be able to repay the tuition fees charged to your card at the end of the month. If not, you’re going to run into a spiral of debt. Credit card interest rates are far higher than loans and will cause problems if you can’t pay your bills.
Credit card tip: Not all credit cards will give you a decent cashback on your school fees. Use the HSBC Advance Card to get up to 2.5% cashback. If you’re an HSBC Advance banking customer, you’ll get to enjoy an additional 1% cashback.
To find out more about credit card rewards and perks, check out the cards you can apply for on BankBazaar.