As parents, you want to do everything you can for your child(ren).
This includes postponing your return to the workforce to care for your young child, moving to a housing estate that’s nearer to your child’s dream school, or delaying your own retirement plans to support your children’s tertiary education ambitions.
As Singaporean parents who’ve worked hard over the years and have faithfully contributed to your own CPF accounts every month, you may also wish to use some of that hard-earned money to help pay for your child’s polytechnic or university education.
While you can do so, usage is governed by rules set by the CPF Board. Understanding these policies in advance will allow you to plan ahead and avoid any surprises when the time comes to pay for your child’s tertiary school fees.
Here are 5 important considerations you need to know about.
#1 Criteria For Using CPF To Pay For Your Child’s Tuition Fees
The CPF Education Scheme is the mechanism that allows you to use monies in your CPF Ordinary Account to pay for the subsidised tuition fees for your child, your spouse, or yourself. Usage of your CPF for other relatives might be possible on a case-by-case basis.
The CPF Education Scheme specifies that the student must be enrolled full-time in a diploma/degree programme at an Approved Educational Institution (AEI) and is paying subsidised tuition fees.
The following is the list of Approved Educational Institutions under the CPF Education Scheme.
– LASALLE College of the Arts
– Nanyang Academy of Fine Arts
– Nanyang Polytechnic
– Ngee Ann Polytechnic
– Republic Polytechnic
– Singapore Polytechnic
– Temasek Polytechnic
– Institute of Technical Education (for students pursuing a Technical Engineer Diploma or a Technical Diploma in Culinary Arts)*
– Nanyang Technological University*
– National University of Singapore
– Singapore Management University
– Singapore Institute of Technology*
– Singapore University of Technology and Design
– Singapore University of Social Sciences
– Nanyang Academy of Fine Arts*
– LASALLE College of the Arts*
* Approved degree programmes offered in partnership with overseas universities at these schools are also included under the CPF Education Scheme.
According to the CPF Education Scheme Terms and Conditions, a guarantor is required if the student is a foreigner.
#2 Limits On How Much CPF You Can Use To Pay For Your Child’s Tuition Fees
If you are below the age of 55, the amount of CPF Ordinary Account (OA) monies you can use for the CPF Education Scheme is your Available Withdrawal Limit, which you can check in the CPF website, under My Statement.
The Available Withdrawal Limit is defined as the lower of the two:
40% of your accumulated OA savings (which is made up of your current OA balance, plus any OA monies already withdrawn for education or investment, excluding monies used for housing);
Your current OA balance (excluding amounts set aside for housing or other uses);
If you are 55 years old or older, you will first need to set aside the Full Retirement Sum (FRS) in your Retirement Account before you can use any remaining savings in your OA up to the Available Withdrawal Limit. To meet the FRS, you can also set aside the Basic Retirement Sum (BRS) and pledge a property your own.
This point is significant, because if you will be 55 and above by the time your child begins tertiary education, you need to ensure you have enough monies to meet the FRS. If you don’t, you might be in for a shock when you turn 55 and a large chunk of your OA savings get transferred to your Retirement Account, which you cannot use to help your child finance their tertiary education.
#3 You Can Use Your CPF Monies Together With The MOE Tuition Fee Loan To Finance Your Child’s Education
If you find that your available CPF monies does not cover the entirety of the payable tuition fees, you use the MOE Tuition Fee Loan Scheme to cover the balance.
In other words, these two schemes are not mutually exclusive, subject to your eligibility to qualify for each scheme, of course.
#4 Your Child Is Responsible For Repayment Of Monies Drawn From Your CPF
In principle, monies withdrawn under CPF Education Scheme is your child essentially borrowing from your CPF, which they are then obligated to repay back into your CPF, with interest, which is pegged to the OA interest rate.
The student has to start repaying the loan one year after graduation or termination of studies, whichever is sooner. If they wish, they can also request to commence repayment earlier using the My Request section on the CPF website.
Application for deferment for repayment is also possible, if the student is serving National Service, still studying full-time (in another course) or if they are unemployed.
Repayments must be made in cash either in one lump sum or via monthly instalments over a maximum of 12 years. You can use the CPF Education Loan Repayment Period Calculator and Monthly Instalment Rate Calculator to plan for a suitable repayment schedule.
#5 If You Have Sufficient Monies In Your CPF, You Can Apply For A Waiver Of Repayment
If you are 55 and above and already set aside the Full Retirement Sum in your the Retirement Account (or met the Basic Retirement Sum with property pledge), you can choose to apply to waive the loan repayment once your child has graduated or terminated their studies.
This can come in handy if you prefer your child to have more cash on hand to contribute to their own CPF savings for their own housing and retirement needs.