Tuition loan vs CPF

[julongmum]

zbear:

julongmum:

[quote=\"zbear\"]The local banks like OCBC, UOB has interest free loans for NUS, NTU, not sure abt SMU. Loan is to be repaid upon graduation.


CPF requires loan to be returned with interest.

For me, I will go for bank loan.

CPF interest is 2.5% and this interest goes to the parent's cpf. Bank loan is more than 4%, interest goes to the bank. Correct me if I m wrong.

Huh? I thought I already said the local banks provide interest free study loans to be fully repaid after graduation. So why do u need to pay 4%?

:?[/quote]Sorry I should have indicated that in the case loan isn't repaid immediately after graduation.

[lego]

floppy:

lego:

I don't quite get why the 2.5% interest should be considered as not lost leh. :?


If the funds in CPF has been left untouched, it will earn 2.5% interest per annum (from government for the use of our cpf monies :siam:). So, there's a \"cost\" to using the amount for uni tuition fees, which is the interest income which would have been earned had it not been used?

A. If the CPF is left in the OA, it will earn 2.5%.
B. If the CPF is loaned for the tuition fee, the borrower would have to pay the loan amount + 2.5% for the duration of the loan.

No difference between A and B. Either you \"lend money to the G\" and earn 2.5% or you lend money to your kids and earn 2.5%.

P.S. prime rate is closer to 5% now I think.

Thanks for the explanation, I get it.
Which means for the cpf account holder, there is no loss of income but for the child, he would need to pay either 2.5% interest per annum from the date the cpf funds had been drawn or the 5% prime rate from graduation. So, how fast he can repay the loan will affect how much in total he has to pay?

[julongmum]

Can I presume most parents will pay the tuition loan for their children?


Or you feel that child should bear the loan repayment even though parents can support financially?

[Nebbermind]

lego:

Thanks for the explanation, I get it.
Which means for the cpf account holder, there is no loss of income but for the child, he would need to pay either 2.5% interest per annum from the date the cpf funds had been drawn or the 5% prime rate from graduation. So, how fast he can repay the loan will affect how much in total he has to pay?

donch know about the rest of you but I'll be financing my kids' study up to uni....so there'll be no impact to my kids
So it'll be putting money from my personal pocket into my untouchable 'govt pocket'. :gloomy:

[Nebbermind]

julongmum:

Can I presume most parents will pay the tuition loan for their children? Anyone let the child bear the loan repayment even though parents can support financially?

If you can support financially, but still want your kids to pay for their own uni education, you can always be the interest-free banker rather than have them pay hefty interest.

[floppy]

lego:

So, how fast he can repay the loan will affect how much in total he has to pay?

Yes.

[floppy]

Nebbermind:

julongmum:

Can I presume most parents will pay the tuition loan for their children? Anyone let the child bear the loan repayment even though parents can support financially?

If you can support financially, but still want your kids to pay for their own uni education, you can always be the interest-free banker rather than have them pay hefty interest.

Even if the parents can support financially, I think it's still a good idea to make the child bear the loan repayment (either with or without interest). There's a life lesson to be taught / learnt: there ain't no such thing as a free lunch.

[julongmum]

Nebbermind:

julongmum:

Can I presume most parents will pay the tuition loan for their children? Anyone let the child bear the loan repayment even though parents can support financially?

If you can support financially, but still want your kids to pay for their own uni education, you can always be the interest-free banker rather than have them pay hefty interest.

Ok this makes sense... Hmmm is it feasible cos may end up child doesn't pay... :pokeeye:

[julongmum]

floppy:

Nebbermind:

[quote=\"julongmum\"]Can I presume most parents will pay the tuition loan for their children? Anyone let the child bear the loan repayment even though parents can support financially?

If you can support financially, but still want your kids to pay for their own uni education, you can always be the interest-free banker rather than have them pay hefty interest.

Even if the parents can support financially, I think it's still a good idea to make the child bear the loan repayment (either with or without interest). There's a life lesson to be taught / learnt: there ain't no such thing as a free lunch.[/quote]I agree but on the other hand was thinking when the child compares her peers do not have to repay as parents funded for them, would she resent n cause relationship with parents sour :scared:

[Nebbermind]

julongmum:

I agree but on the other hand was thinking when the child compares her peers do not have to repay as parents funded for them, would she resent n cause relationship with parents sour :scared:

Well, there's no right or wrong. You just have to decide what is the best for your situation.