CENTRAL PROVIDENT FUND (Financing of part-time degree courses)

Mr John De Payva asked the Minister for Labour if he will allow Central Provident Fund (CPF) account holders to use their CPF to finance part-time degree courses.

The Minister for Labour (Dr Lee Boon Yang): Mr Speaker, Sir, the CPF Education Scheme enables CPF members to use their CPF savings to pay for their own or their children's tuition fees for full-time courses conducted by local universities and polytechnics. The CPF Education Scheme is a loan scheme. Hence, a member who borrows CPF savings under the scheme must repay the amount borrowed plus interest in cash.

In most cases, part-time degree courses are meant for working adults. Part-time students can also plan in advance their studies and hence put aside sufficient savings to meet their expenses. They should be able to pay the part-time course fees with their own savings, instead of borrowing from their CPF savings.

My Ministry has therefore no intention of extending the Scheme to allow the use of CPF for paying tuition fees of part-time degree courses.

Mr John De Payva (Nominated Member): Sir, would the Minister reconsider, in view of the national direction of training and retraining to upgrade oneself and the constraints that family workers have to go through to look after their family commitments, that they be allowed to use CPF money to finance their courses?

Dr Lee Boon Yang: Sir, my Ministry, together with the Ministry of Trade and Industry, has been very supportive of the call for workers to undergo training and retraining. In my view, workers who need to upgrade their skills today have many opportunities to undergo skill upgrading courses with support from their employers and also the Skills Development Fund. There are ample opportunities and training spaces available for workers who need to upgrade their skills through part-time training courses. The Skills Development Fund is looking at various ways and means of increasing the number of training places available for such workers. So there is really no necessity to make CPF available for paying the fees for part-time degree courses in this context.

Dr Kanwaljit Soin (Nominated Member): I have three supplementary questions, Sir. (1) Would the Minister reconsider if the worker does not have enough savings for his part-time course? Would he then make an exception in that case? (2) For part-time courses, the worker continues to work and therefore can continue to build up the CPF. So if some CPF is taken out for education, it does not deplete the account as for a full-time course. (3) It seems to me that we are more willing to let people take their money for investment purposes and buying shares than we are for education purposes. Do we have the right priority?

Dr Lee Boon Yang: Sir, in my main answer, I said that a person can plan his part-time course in advance. So if a person does not have sufficient money today to enrol in a part-time course, whether it is for a degree or diploma, there is no difficulty for him to defer for a short period of time and build up enough personal savings so that he can carry on with his education. In fact, today, thousands of Singaporeans are doing it without any difficulty, as evidenced by the number of people who are already taking up such part-time studies. None have had to appeal to CPF directly to use their CPF because they have been able to save sufficient money over a period of time to take up such courses. So I do not think there is a need to make a special exception in this instance to allow such people to use their CPF, although if we do so, of course, it would be more convenient.

But my point is that since people can plan their part-time courses, we encourage them to plan, and the fact that they have to put aside some savings of their own in order to do the course, it would provide better motivation and incentive for them to complete their courses and to do well in those courses so that they can see rising income as a result of higher educational attainment.

As to whether we in fact have the right priority, I think the Member has to understand that the CPF investment scheme is aimed at helping CPF members to build up their assets. Whereas money that is spent for education is consumed. Whether in fact that would lead to a direct increase in income in proportion to the consumption of CPF savings is yet to be seen. Whereas in the case of people buying shares, if they invest wisely, they would see the shares appreciating over time and they would be able to build up their CPF savings to meet their expenses in their old age. That is the difference between encouraging people who have savings to invest through the CPF investment scheme and not supporting requests for use of CPF to pay for part-time tuition fees.

Dr Kanwaljit Soin: Would the Minister then consider some recognised special courses which the Ministry thinks will lead to asset enhancement in future and allow the member to use the money for these particular courses and not a blanket approval?

Dr Lee Boon Yang: Sir, it is not the purpose of the Ministry to scan the wide variety of part-time courses available and to decide which is better for a particular CPF member. This should be left to individuals to make the decision themselves and it is up to them to put aside sufficient non-CPF savings so that they can meet the expenses for the part-time courses. If she were to ask me, I would say that our criterion is that if he is prepared to undertake a full-time course, with all the discipline and rigours of a full-time course, we are prepared to let him use his CPF to meet the educational expenses under the current education loan scheme.

Mr Low Thia Khiang: Sir, does the Minister agree that even with the CPF investment scheme, there is no guarantee that the asset will be increased? It depends on the shares.

Dr Lee Boon Yang: That is why I said that under the CPF investment scheme, if you invest wisely and prudently, you should see an appreciation of your assets over time, whereas in the case of using CPF for education, the savings would have been consumed immediately and whether you can recover by way of higher income or not is yet left to be seen.

Mr Chiam See Tong: I would like to follow up with a supplementary question. The Minister said that it is not incumbent on the Ministry to scan the various courses offered by foreign universities. Will the Minister consider allowing CPF to be used if these part-time courses are offered by recognised local institutions, for example, the National University of Singapore or one of the polytechnics, as it is done with full time studies?

Dr Lee Boon Yang: Sir, my reasons for not allowing the CPF education loan scheme to be extended to part-time courses apply even if the course is offered by NUS or NTU or one of the polytechnics in Singapore. Currently, we will only allow CPF savings to be used for tuition fees if the student is on a full-time course enroled in any of the tertiary institutions in Singapore. We do not intend to make a change in this regard.

Dr Kanwaljit Soin: Would the Minister explain his rationale why a full-time course is not consumption but investment and a part-time course is consumption but not investment?

Dr Lee Boon Yang: Mr Speaker, Sir, I have explained on 18th March 1993 the reason why CPF has allowed the use of CPF savings for full-time courses. It was a special exception. We are not making a judgment to say that in the case of a full-time course it would not be consumption. It is in fact just as consumptive as paying fees for part-time courses. But the fact is that the CPF education loan scheme is an exception made in order to assist parents who need to pay for the expenditure of their children to enrol in tertiary institutions. If they choose not to take educational loans which are today widely available, they can then call upon their CPF savings to meet the expenses of their children. In the process, we felt that having allowed a CPF member to use his CPF savings for his children's education, and if he wants to do so for himself on the basis of a full-time study, we should allow him to have the opportunity to do so.