Singapore is a highly competitive country, and this has resulted in the constant need for Singaporeans to attain a university degree in order to get a job. Unless one is lucky enough to be on the “Mum and Dad Scholarship”, many graduates often enter the workforce with student debt. Statistically, the average student debt for a Singaporean student studying at a local university is approximately $20,000 – $25,000. For a Singaporean student studying in an overseas university, their debt is typically much higher, from approximately $100,000 – $200,000.

For some, being weighed down by student debt may be a terrifying idea. However, every down has its up, and the upside of having a student loan is the ability to boost your credit rating with regular repayment behaviour! Being new to the workforce, many graduates would have a CX rating in their credit report, which is a non-scored grading given due to insufficient credit activity. However, if you have been regularly making payments to your student loan, then this would serve as a good form of credit activity and history. Having a good credit rating is crucial in receiving approvals from banks and financial institutions when you make new credit applications.

In other words, your student loan has secured more than an education—it has also boosted your future credit abilities!

Working Towards Financial Independence 

It may seem a long and arduous journey when you already have loans to repay before even entering the workforce, so here are some tips that will make it easier when repaying your student debt:

1. Check Your Loan Repayment Requirements

It is important to know your repayment requirements of the loan the moment you take it. This includes things like your minimum payment sum, type of repayment, and repayment commencement date. Being aware of such terms and conditions will allow you to plan in advance so that you will not be caught off guard when it is time to repay your study loan and incur late fees. Based on your repayment type, you can also make plans on paying earlier than the intended start date to lower the interest fees charged.

2. Watch Out For Your Loan Maturity Date

Your loan maturity date is the date your outstanding balance becomes due in full. Different loans have different tenures. Make sure you know this date well as you would not want to get shocked about having to pay a large amount of money out of the blue. A sudden required payment of thousands of dollars is not affordable for everyone.

3. Work Out a Budget

If you have already started working and are in the midst of repaying your study debts, it is recommended to first work out how much you need for food, transport, utilities and housing. The remainder of your pay should be split into money for savings and the repayment of your study loan. If you can afford it, you should make bigger repayments than the minimum amount, as doing so would mean that you would pay off the principal interest faster and hence, be charged lesser interest.

4. Prioritise and Pay Quickly

It is crucial to prioritise between a need and a want. Paying off your student loan earlier would mean that you have spent an overall lesser amount, and you will be able to achieve financial independence much quicker. Therefore, make an effort to prioritise making loan repayments over entertainment or unnecessary expenditures so that you will have lesser financial burden.

5. Make Additional Payments 

A good way to hasten your debt repayment is by making additional payments each month. You may do so by considering putting in any excess cash you have into paying off your debt.

At the end of the day, as long as you stay disciplined with your finances and cultivate good credit habits from the start, paying off your student debt is something completely achievable. Always remember that it is important to be a responsible payer by making your repayments in time and preferably in full, lest you find yourself with a debt that you may have difficulty paying off in the future!

This article was contributed by Credit Bureau Singapore. If you believe that this article has helped you better prepare for the repayment of your student debt in the future or currently, follow us on Facebook and Instagram @creditbureausingapore for more of such tips!