Do Personal Loans for Students With No Income Exist?

Students appear to be carefree, with nothing but their grades to worry about. That might be true, but tuition fees, living expenses, and other costs are constantly on their mind. These are perfect reasons for taking a personal loan, especially if their parents can’t support them financially.

This leads us to two common questions: Do loans for students with no income exist? And how much personal loan can you get as a student?

We’ll answer these in our handy guide, showcase the alternatives to a personal loan for students, and explain what to watch out for when you’re taking up a student personal loan.

Can students get personal loans in Singapore?

Apart from study loans, which are specific to tuition fees, students in Singapore can obtain personal loans. However, this is challenging as most of them aren’t drawing an income yet. Even so, it’s possible to get a personal loan without a payslip in specific cases.

Here are three avenues you can consider for a personal loan for students:

Banks vs Licensed Money Lenders vs Informal Borrowing

What is the maximum personal loan amount you can borrow as a student?

If you’re borrowing from a bank, the maximum personal loan amount you can get generally depends on your annual income. Some banks allow you to borrow up to 90% to 98% of your approved credit limit, while others enable you to borrow up to 6x or 8x your monthly income if you earn more than S$120,000 annually.

Take note, however, that the Monetary Authority of Singapore (MAS) imposes a borrowing limit of up to 12x your monthly income. This applies to all unsecured facilities offered by financial institutions, including personal loans, credit cards, balance transfers, and debt consolidation plans.

If you don’t qualify for a personal loan from a bank, a licensed money lender can be a good alternative. Licensed money lenders offer faster approvals, more flexible terms, and less stringent requirements, which may be suitable for students with no income.

Licensed money lenders in Singapore are highly regulated by the Ministry of Law and have to comply with strict guidelines under the Moneylenders Act.

In fact, the Ministry of Law requires licensed money lenders to be transparent about their rates and explain all loan terms clearly to you in a language you are proficient in so you understand everything that’s being discussed.

Below is the maximum unsecured loan amount you can borrow from all licensed money lenders at any one point in time:

Looking for the best personal loans in Singapore? Compare the best personal loan rates on Personal Loan Finder now.

3 common reasons why students apply for personal loans

1. Tuition expenses

Although study loans are designed to cover your tuition fees, you might need a personal loan if:

1. You can’t obtain a study loan
2. The amount you’re granted isn’t enough for your entire course fee

Whether you’re in a public or private institution, tuition fees are easily in the five-digit range. With a personal loan for students, you can split your fees into manageable monthly instalments.

2. Overseas exchanges or study trips

This is often the highlight of tertiary education, letting you build stronger bonds with your coursemates and network in other schools. Unfortunately, the cost can be prohibitive, especially if the exchange or trip is long.

Loans for students with no income will come in handy here too. You can defray the upfront cost and repay it in smaller monthly sums across a year or several years.

3. Personal emergencies

Crises are bound to happen and if you need funding to resolve them, you’d most likely turn to loans for students with no income. Whether it’s an injury requiring surgery and rehabilitation or needing to repair your family car after a traffic accident, these are reasons enough for a loan.

3 alternatives to personal loans for students

1. MOE loan

If you’re a full-time diploma student in any local polytechnic or LASALLE, or NAFA, you can obtain a loan from the Ministry of Education for up to 75% of your subsidised tuition fees. What’s more, full-time Singapore Citizens and Permanent Residents in NUS, NTU, SMU, SUTD, SIT, SUSS, LASALLE and NAFA are eligible for a loan which covers up to 90% of their subsidised tuition fees.

This personal loan for students with no income can be supplemented by the MOE’s Study Loan, which pays for the remaining 10-25% and provides you with a living allowance loan. However, take note this is only available for lower-income families.

2. Scholarships or bursaries

There’s a variety of scholarships and bursaries in Singapore. If you’ve been acing it academically, discover which ones you might be eligible for. This way, you can avoid taking up personal loans for students with no income.

Now that you know the alternatives to a personal loan for students with no income, you also need to be aware that they’re less flexible. For instance, MOE’s Tuition Fee Loan only covers your course fees.

3. CPF education loan scheme

The CPF Education Loan Scheme allows you to use your own, your spouse’s, siblings’, children’s or relatives’ CPF Ordinary Account savings to pay for tuition fees for full-time diploma/degree courses that are subsidised by the MOE and conducted locally at approved educational institutions.

The interest rate is computed based on the prevailing CPF interest rate, or 2.5% p.a., which starts from the date of withdrawal or when school starts, with a maximum Ordinary Account withdrawal limit capped at 40%. In case you didn’t already know, the interest and loan amount are to be repaid to the lender’s CPF Ordinary Account in cash, with repayments commencing a year after you graduate or leave the course (whichever is earlier).

What are the requirements to qualify for a personal loan for students?

Personal loans for students are hard to come by, but the requirements to qualify for one aren’t extensive:

1. Be at least 18 years old
2. Be a Singapore Citizen or Permanent Resident
3. Meet the loan’s minimum income requirement or have a guarantor
4. Provide your CPF contribution statements (if you’re a student who’s working)

What are the best personal loans for students in Singapore?

As this list comprises personal loans for students who are unemployed, we can narrow it down to three options:

1. POSB’s Further Study Assist

This personal loan for students with no job is meant for your tuition fees at private schools in Singapore or a reputable institution abroad. You’ll need a guarantor who has a yearly income of at least S$24,000 and is a Singapore Citizen or Permanent Resident. Alternatively, you can apply alone if your annual income is S$18,000 and above.

The POSB Further Study Assist’s interest rate is 4.38% p.a., has a 2.5% processing fee, a borrowing limit of up to 10x the applicants’ monthly income or S$160,000, and a tenure of up to 10 years.

2. OCBC’s FRANK Education Loan

Although this personal loan for students with no job also specifically settles your tuition expenses, it’s more flexible in that:

1. It’s valid for a large list of local and overseas institutions
2. You can choose from three repayment options
3. You can supplement your joint applicant’s, i.e. guarantor, annual income to meet the requirement OCBC has laid out

The OCBC FRANK Education Loan’s interest rate is 4.5% p.a. (5.17% EIR), has a borrowing limit of up to 10x the applicants’ monthly income or S$150,000, and a tenure of up to eight years.

3. Licensed money lenders

If you’re able to put down collateral or have a guarantor, licensed money lenders are likely to approve your application. And with over 150 of them, you’d definitely be able to compare between a few who are offering personal loans for students who are unemployed.

Risks and things to consider before taking a student personal loan

1. Repayment responsibility

Taking on debt even before you start working has the potential to snowball quickly. Use this opportunity to start being disciplined with your finances early. Ensure you’re repaying or helping your parents repay every month’s instalment before anything else.

2. Avoiding unlicensed lenders and upfront fee scams

No matter how desperate you are for a personal loan for students with no job, don’t fall for unlicensed lenders who bait you with offers that are too good to be true. Additionally, don’t believe individuals guaranteeing you a loan by simply paying a ‘small’ upfront fee.

3. Overborrowing or using the funds for non-essentials

This is related to the point above. Personal loans for students who are unemployed can be tricky to manage. It’s crucial to use the funds for expenses which are essential, i.e. your tuition fees, meals, and transport. It’s also tempting to overborrow to create a buffer, but don’t fall for it as this opens up the possibility of spending on non-essentials.

In closing

Folks still studying arguably need money the most, but a personal loan for students with no income is rare in Singapore, apart from study loans. On the bright side, personal loans for students with no income aren’t entirely impossible to find. Various lenders offer it, and there are alternative financing options.

Have all the information you need? Search for the best personal loans to fund your studies and start applying in under a minute! If you’re still unsure about student personal loans, reach out to us and we’ll answer any queries you have.