How to Repay Your Student Loan Fast in Singapore (2025 Guide for Fresh Grads)

Starting Out with Debt? Here’s How to Take Control Early

Graduating with a four-figure paycheck and a five-figure loan isn’t exactly the dream start but you are not alone: 1 in 3 young Singaporeans admit they are “not confident” about handling debt. At the same time, the latest Graduate Employment Survey shows a record high median starting salary of $4,500, but after CPF deductions, rent, and other daily expenses, it can feel a lot smaller than it looks on paper.
Now add in an education-loan interest rate that now floats around 4–5% after grace periods and you will realise that every extra month you owe money is one fewer dollar compounding for your future.

Here’s a guide that comes in handy, a straightforward plan built for fresh grads in Singapore.
You will:

• The four main types of student loans and how much they really cost you
• How much you can and should set aside each month to clear your debt faster
• 8-steps to help you cut your repayment time in half
• The common traps that secretly drag your loan out for years longer than it should

Why Speed Pays in 2025

The Interest Adds Up

Most government-backed Tuition Fee Loans (TFL) switch to 3-Month SORA + 1.5 percentage points once you graduate, or roughly 4.2–4.8% per year in mid-2025. Meanwhile, if you leave your extra cash sitting in your CPF Ordinary Account (OA), it only earns 2.5% per year. Paying the loan early is therefore a risk-free “investment” that nets about 2% more than leaving spare cash idle in OA, better than what many savings accounts offer.

Compound Interest Works Both Ways

Let’s say you borrowed $28,000 and took the full 20 years to repay it. At 4.75%, you’d end up paying nearly $9,600 in interest alone. But if you shorten your loan term to just 8 years? You could save around $7,000 in interest. That’s real money you could instead channel into your CPF Special Account (4% p.a.), start investing in REITs, or put toward your first home.

The Bottom Line:
The faster you pay off your student loan, the less you waste on interest, the more you can put your salary to work growing your future.

Understand the Student Loan Options in Singapore

1. MOE Tuition Fee Loan (TFL)

This is the most common loan among local graduates. It’s interest-free while you’re studying, but once your grace period ends (usually six months after graduation), the rate switches to about 4.2%–4.8% p.a., depending on market conditions.

• Minimum monthly repayment: $100
• Repayment period: Up to 20 years
• Smart move: Start repaying as soon as the grace period ends(!!!) Every month you delay racks up unnecessary interest.

2. MOE Study Loan

This loan supports students from lower-income households. If your per capita household income is $950 or less, you can enjoy zero interest for the first five years after graduation. If you don’t qualify for the waiver, it behaves just like the TFL.

• Tip: Prioritise this loan only after you’ve cleared your TFL, unless you’re eligible for the interest-free period.

3. CPF Education Scheme

This scheme taps into your parents’ or relatives’ CPF Ordinary Account (OA) to pay your tuition. The loan accrues interest right away at 2.5% p.a., the same rate CPF pays.

• Good news: It’s a lower interest rate, so it’s okay to tackle this loan after clearing the higher-interest TFL or Study Loan.
• Pro tip: Paying even $50 extra a month can save you hundreds in interest.

4. Bank Education Loans

If you studied overseas or at a private school, you might have taken a bank loan instead. Rates typically start at 4.4% p.a., and repayment periods are usually 8–10 years.

• Watch out: Some banks charge early repayment penalties (usually around 1% of your remaining loan), while others don’t. Always read the fine print.

Cash-Flow Reality Check for Fresh Grads

How much of your paycheck can actually go toward repaying your student loan? Let’s break it down.

CPF Deductions

If you’re under 35, 20% of your gross salary goes straight into your CPF. It’s mandatory, and while it builds your future nest egg, it also shrinks your immediate take-home pay. For example, on a $4,500 gross salary, that’s $900 gone to CPF, leaving you with $3,600 before taxes.

Monthly Essentials

Even if you’re living with family (like many graduates do), you’ll still have basic expenses. Here’s what a typical month might look like:

• Public transport: ~$120
• Meals, phone bills, personal spending: ~$400–$600
• Utilities (if renting a room): ~$196 (average across shared flats)

What If You’re Renting?

Thinking of moving out soon? Budgeting becomes even more critical.

• Room rental (non-central): $850–$1,100/month
• Room rental (central areas): $1,500+/month
• Utilities, Wi-Fi, groceries: Add $300–$500

DTF Recommends

To keep your finances on track:

• Keep housing costs within 30% of your take-home pay (as required by MSR)
• Set aside at least 15% of your pay toward loan repayment (strive for 20% if you can)

It’s not a hard rule, but this split gives you enough room to make steady progress on your loan without feeling constantly broke.

8 Steps To Repay Student Loan Quickly in Singapore

Here are the 8 steps we would recommend as a recent graduate:

Step 1: List Every Debt

• Total balance
• Interest rate
• When repayment starts
• Minimum monthly installments

Seeing everything on one page removes guesswork and gives you control.

Step 2: Pick Your Strategy

• Avalanche method: Pay off the highest-interest loan first (best for saving money overall).
• Snowball method: Pay off the smallest loan first (good for motivation).

Both work. Pick one and stick with it, consistency beats perfection.

Step 3: Automate Your Payments

Set up GIRO to run the day after payday. That way, your loans get paid before you’re tempted to spend it on weekend plans or a new phone. Automation is your best financial hack.

Step 4: Use Bonuses as Fuel

The Annual Wage Supplement (AWS) and performance bonuses are common but not mandatory. Try this: commit 70% of every bonus to your highest-interest loan the week you receive it. You’ll barely miss the money, but your loan balance will definitely be noticed.

Step 5: Tap on the Gig Economy

Even $300/month in extra income, from tutoring, design gigs, or part-time shifts can cut thousands off your total repayment.

Step 6: Be Strategic with CPF

Resist voluntary OA top-ups until your loan rate drops closer to 2.5%. Instead, use extra cash to knock off your loan then consider CPF top-ups after you’re debt-free.

Step 7: Claim Course Fees Relief

IRAS lets you deduct up to $5,500 a year for self-funded upskilling. If you’re in the 11% tax bracket, that’s a $605 savings, enough for several extra loan installments.

Step 8: Refinance Smartly

After a year of on-time payments, your credit score improves. Especially for the banks or education loans, if you can refinance at 1% lower, it’s worth exploring but factor in processing fees and lock-in clauses.

Mistakes That Keep Graduates in Debt Longer

Repaying loans is hard enough, don’t make it harder by falling into these common traps:

1. Delaying Just Because You Can

Your Tuition Fee Loan (TFL) may offer a grace period, but every month you delay after that adds interest. Push payments by a year, and you’ll owe hundreds more without realising it.

2. Treating All Loans the Same

Not all debt is created equal. If one loan charges 5% interest and another 2.5%, focus your firepower on the expensive one first. Paying off the wrong loan first wastes money.

3. Underestimating Side Income

An extra $300 from weekend tutoring or food delivery might not seem like much but over a year, that’s $3,600 toward your loan. Small hustle, big impact.

4. Overcommitting to CPF Top-Ups

Topping up your CPF OA while paying off a high-interest loan is like filling a water bottle with a hole in the bottom. Yes, CPF is important but clear the debt first, then grow your savings.

5. Ignoring Fine Print

Some loans charge early repayment fees usually around 1%. If you’re about to pay off a big percentage of your loan, check if there’s a penalty that eats into your savings. Sometimes it’s worth waiting one or two months to dodge the fee.

Case Study: Marcus Clears $22,000 in Just 2 Years

Just to get a better understanding, let’s take a look at Marcus. He’s a 24-year-old NTU engineering graduate who started his first job in July 2023 earning $4,300 a month. Like many, he left school with a Tuition Fee Loan (TFL), 22,000 to be exact. But Marcus wasn’t content with minimum payments. From the start, he committed to a GIRO deduction of 400/month, far more than the required minimum. Each December, he channelled 80% of his Bonus, roughly $3,440, straight into the loan.

To boost his efforts, he also taught weekend coding classes for kids, earning an extra $250/month. He treated every dollar from that side hustle as untouchable until the loan was gone. He didn’t just hustle, he got strategic. Marcus signed up for two short cybersecurity courses costing $2,400 total, which later qualified him for Course Fees Relief across two tax years. That move alone saved him about $1,210 in taxes, which he also funnelled into repayment.

By month 24, his loan was fully cleared. Instead of paying $2,530 in interest over a standard timeline, Marcus paid just $970, saving $1,560. Today, those freed-up dollars go into his CPF Special Account, compounding at 4% annually. His secret? A plan, a side hustle, and relentless follow-through. Just consistency.

FAQs

Now to clear some common questions that you may have and often get asked

• Can I repay MOE and CPF loans at the same time?
  Yes, you can but be strategic. Prioritise whichever loan has the higher interest rate, which is usually the MOE Tuition Fee Loan. Once that’s under control, you can shift your focus to the CPF Education Scheme.

• What if I can’t meet even the minimum?
  If you’re struggling, reach out early. Both MOE and banks offer graduated or extended repayment plans. Most graduates won’t default, not because of luck, but because flexibility is built into the system. Use it if you need to.

• Are there tax breaks for loan interest?
  Singapore doesn’t offer tax deductions for student loan interest. But if you’re upgrading your skills through eligible courses, you can claim up to $5,500 under Course Fees Relief, which helps you free up cash for loan payments.

• Can I use CPF OA to pay off my education loan?
  You can repay a CPF Education Scheme loan by returning funds to the OA you borrowed from, but you cannot draw new OA funds to wipe a bank or MOE loan.

Quick Summary: The DTF 10-Point Action Checklist

1. List every loan.
2. Choose your repayment strategy.
3. Automate your minimum payments.
4. Aim to set aside at least 15% of take-home pay:
   More if you can. The faster you clear the principal, the less you’ll pay in total.
5. Pledge 70% of bonuses and 100% of gig income to debt repayment.
6. Keep your rent under 30% of take-home pay:
   Can’t afford that in the city? Look west or north — it makes a huge difference.
7. Claim Course Fees Relief if you’re upgrading skills:
   Up to $5,500 a year in tax relief means more take-home cash to throw at debt.
8. Check in on your loan every quarter.
9. Build a basic emergency fund (6 months of expenses).
10. Celebrate milestones!!

Conclusion: Turn Your First Paycheck into a Freedom Engine

Paying off your student loan isn’t just about cutting corners, it’s about making sure the first dollars you earn go toward building your net worth, not paying interest. With the right mix of strategies (think bonus windfalls, CPF optimisation, Course Fees Relief, and the gig economy) you could clear a five-figure loan in two to five years instead of dragging it out for decades.

Set aside one quiet evening this week. Gather your loan statements and payslips, and run the numbers through MOE’s loan calculator. Map out a 24-month repayment plan, set reminders for GIRO deductions and bonus periods, and stick that schedule somewhere you’ll see it daily. Better yet, share it with a friend for accountability. The sooner you start, the sooner you’re debt-free and once that’s behind you, every dollar you earn is truly yours.