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Here’s What You Need To Know About The Newly-Announced Suspension Of Student Loan Repayments

You can now defer your student loan repayments. But should you?


As a follow-on to the Resilience Budget, MOE has announced a one-year suspension of loan repayments and interest for government student loan schemes. This applies from 1 June 2020 to 31 May 2021, for all autonomous university and polytechnic graduates.

For non-MOE student loans, MAS has announced that borrowers can choose to defer repayment up to 31 Dec 2020. This applies to full-time and part-time programmes at local and foreign private tertiary institutions.

Both types of loan deferments have varying conditions that students need to know about. We will explain the details below.

Read Also: What You Need To Know About MAS’ Second Support Package To Ease Cash Flow And Reduce Debt Concerns

What Type of Loans Are Eligible?

Those studying in polytechnics and autonomous universities can apply for a government loan, namely Tuition Fee Loans, Study Loans and Overseas Student Programme Loans.

Most banks would have sent out a notification regarding the suspension. But if you are unclear about which bank administers your loan:

  • SMU students should approach their respective institution
  • NTU/NUS students should approach OCBC or DBS
  • All other students can approach DBS

For non-government loans, various banks offer education loans at different interest rates. Most banks offer two repayment methods.

The standard is to pay monthly instalments and interest upon obtaining a loan; the graduated pays only interest while studying, while upon graduation, you pay the principal and interest. Lastly, the graduated plus pays only interest while studying and one year after graduation, only from the third year onwards you pay the principal and interest.

Other students might have chosen to finance their education with the CPF Education Scheme, where you use your own or your parents’ CPF to pay for tuition fees. For this scheme, there is no suspension of repayments.

Read Also: Complete Guide To Using Your CPF To Pay For University And Polytechnic Fees Under The CPF Education Scheme

Eligibility Criteria For Loan Repayment Suspension

For government loans, you need not apply for this loan deferment. All graduates with outstanding loans, regardless of nationality, are given an automatic suspension.

This applies to graduates who have already started on their loan repayments, and students graduating during this suspension period. Students who have withdrawn from their courses and have outstanding loans are also eligible.

If you wish to continue repaying your loans, you can continue to do so by contacting your bank.

For non-government loans, it works on an opt-in basis. However, if you have missed more than 3 months of instalment payments prior to this application, you will not be eligible.

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Will Interest Accrue During This Suspension Period?

For the government loans, no standard or penalty interest will apply on your outstanding loan.

But for non-government loans, interest will continue to accrue on the deferred principal amount during this period. This means that there will be no additional interest charged on the interest incurred during the deferment period.

One should take note that deferred repayments for non-government loans lead to a higher total interest payment at the end.

After this deferment period, your loan tenure may be extended based on the number of months you have deferred. Thus, your monthly instalment will also be revised based on the interest accrued during this deferment, and the outstanding balance over the remaining loan tenure.

You may choose to opt-out of the scheme anytime without additional fees before 31 December 2020. By deferring your loan under this scheme, it will not be adversely recorded by the bank. It will also not affect your credit bureau standing.

Read Also: Looking For Work Amid The Challenging COVID-19 Job Market? These Government Initiatives Can Help

Making Loan Payments During The Suspension Period

During this deferment period, all GIROs will be suspended for government loans. If you would like to make repayments for DBS, you can do so via internet banking, cash, cheque, wire transfer. For OCBC, available payment modes are cash, cheque, MEPS and SWIFT. The OCBC repayment form for study loan is here.

Read Also: 5 Important Questions You Should Ask Yourself Before Taking Any Financial Or Investment Advice Online

Applying For The Deferment of Student Loans

You may apply with your respective bank to apply. Here is a non-exhaustive list of banks where you can head to CIMB Monthly Rest Education Loan, Maybank Education Loan, POSB Further Study Assist Loan, or OCBC Frank Education Loan.