Ask Sandra: Can I use CPF savings to pay for my child's poly or university fees?

Q: My younger daughter will be starting her polytechnic studies this year and my older daughter is planning to study business at a local university.

Can I use my CPF savings to pay for their tuition fees?

Will they have to repay the money once they graduate?What if my polytechnic daughter wants to study for a degree after her poly studies?

Can I also know if tuition fees at the local universities are likely to rise over the next few years?

The withdrawal limit for education is 40 per cent ofthe balance in your Ordinary Account, excluding amounts withdrawn for housing. If youhave enough inyour balance, you can useit to pay 100 per cent of the tuition fees.If it is insufficient, you can consider using your spouse's CPF savings as well.

A: Yes, students entering the local polytechnics and universities can use their parents' CPF savings to pay their tuition fees.

But note that the withdrawal limit for education is 40 per cent of the balance in your Ordinary Account, excluding amounts withdrawn for housing.

If you have enough in your balance, you can use it to pay 100 per cent of the tuition fees. If it is insufficient, you can consider using your spouse's CPF savings as well.

For your daughter entering university, you can use CPF savings to pay the tuition fees, but not for miscellaneous or hostel fees.

Repayment starts one year after graduation or on leaving the course, whichever is earlier.

The student has to repay the full amount of money withdrawn and the interest on it from the time it was withdrawn. The interest is based on the prevailing CPF rate.

The repayment can be made in one lump sum or by monthly instalments over up to 12 years.

Your younger daughter can apply to defer the repayment if she goes on to take up a degree course at a university after completing her polytechnic studies.

But please note that the maximum 12-year repayment period will be reduced by the period of deferment granted.

For example, if a student has 12 years for repayment and has successfully applied to defer the repayment for two years, the remaining maximum repayment period is 10 years after the deferment has ended.

The monthly repayment amount may also be increased to enable the student to fully repay the outstanding loan within the remaining repayment period.

As interest on the outstanding loan amount will continue to accrue during the deferment period, students should start repaying the loan as soon as they can.

If you require further information, you can call the CPF Education Scheme hotline on 6229-3377.

University fees may go up while your daughter is enrolled, but the tuition fee for students starting on their degree programme will be fixed at the year in which they start.

So, if your daughter wins a place in a local university this year and starts on her degree studies in August, she will pay the 2016/17 fees throughout her three or four years of study, even if the fees are raised during that time.

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A version of this article appeared in the print edition of The Straits Times on January 25, 2016, with the headline 'Ask Sandra'. Print Edition | Subscribe