LOCAL GRADUATES

LOCAL GRADUATES: * * *

**

(Debt level arising from study loan): **

5.

Ms Sylvia Lim asked the Minister for Education for the past three years, what is (i) the proportion of local students who graduated from NUS, NTU and SMU in debt due to the financing of their studies; and (ii) the average quantum of debt incurred.

Dr Ng Eng Hen: About one-third of our local students who graduated between 2005 and 2007 from the local universities had taken up tuition fee loans to finance their undergraduate studies. (Another one-third of our local students drew down on either their parents’ or their own CPF under the CPF Education Scheme to pay for their fees.)

Most students would have graduated with an average debt of about $20,000. Based on the maximum loan repayment period of 20 years, a university graduate would need to repay about $130 per month(1), which is about 5% of the average starting pay of graduates(2). The pay of a graduate is very likely to rise as he progresses in his career, enabling him to repay the debt in a shorter period of time.

Government has introduced the Post-Secondary Education Account (PSEA) and will continue to top up the amounts from time to time when budget surpluses allow. For needy students from the lower income brackets, the Government has enhanced the financial assistance schemes to provide more help to these students. With the PSEA and the enhanced financial assistance schemes, needy students can use the PSEA and higher bursary quanta to defray some of their fees, thereby further reducing their debt burden.

(1) This is computed based on repayment terms for the Tuition Fee Loan Scheme where interest is computed based on average prime rates of the local banks. The loan is interest free during the students’ course of study and interest would accrue only after graduation.

(2) Based on the 2007 Graduate Employment Survey, the average starting pay of a graduate is about $2,800 per month.

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