Interest free student loan? Wow! Sounded too good to be true. I thought it was some kind of scam when I read this: How I used my university student loan to partially pay off my university fees.
[You can read above to find out how InvestProperlyLah capitalised on the loan to make some gains at the same time! Interesting move.]
It is certainly no scam. I did a check at the DBS website and found more information: DBS Tuition Fee Loan. So indeed, you could take up an interest free loan for the duration of the course at a tertiary institute.
There are various conditions involved for sure. But it seems straightforward enough. It can fund 90% of subsidised course fees for university (or 75% for polytechnic). You just need a guarantor between the age of 21 to 60 who is an undischarged bankrupt.
It doesn't seem too difficult to take up. It's an alternative to drawing a loan from parent's CPF. By the way, you can do one or the other, but not both.
The loan can be repaid in a lump sum or in equal installments up to 20 years at a minimum of $100 per month, starting within 2 years from graduation. But if the loan is not repaid upon graduation, I think the interest will be hefty as it is pegged to the average prime rate of the 3 major banks.
Looks like an alternative for my kids to consider, in time to come. And I can leave my CPF to continue clocking interest instead. So the education fund that I've been building up for them can remain invested until they graduate to pay off the loan.