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student holding a stack of books and a piggybank to represent student loans in the Philippines

From Dreams to Degrees: Navigating Student Loans in the Philippines

Tue, 08/22/2023

Are you considering pursuing higher education but worried about the cost? You're not alone, luv! With rising inflation, it’s getting more and more expensive to get that undergraduate degree. That’s why many students and their families turn to financial aid to help cover the expenses. One of the most popular ways of funding higher education in the Philippines is through student loans.

 

But with so many options available, how do you choose the right one?

 

In this article, we’ll explore the different types of student loans in the Philippines and provide tips on how to choose and manage your student loans effectively.

 

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What are Student Loans?

Student loans are a type of financial aid that helps students cover the cost of their education. They are designed to assist students and their families in financing higher education expenses, such as tuition, other fees, books, gadgets, and living expenses.

 

When considering financial aid options, it's important to understand the differences between student loans and other forms of financial assistance. Here is a brief comparison:

 

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Type Features
Scholarships
  • Awarded based on merit, need, or specific criteria
  •  

  • Do not need to be repaid
  •  

Grants
  • Need-based educational funding usually provided by the Government or educational institution
  •  

  • Do not need to be repaid
Student Loans
  • 6% interest per year for half of loanable amount
  •  

  • Borrowed funds that must be repaid with interest
  •  

  • Can be obtained from government programs, private banks and financial institutions, educational institutions, and non-profit organizations
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Student Loan Options in the Philippines

Infographic that shows student loan options in the Philippines

 

When it comes to student loans in the Philippines, there are several options available for students and parents alike. These options can be categorized into the following:

Government Program

The government offers various loan programs to help students finance their education through student loans in the Philippines. These programs often have favorable terms and conditions. Here are three options you can choose from:

 

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Loan Key Features Eligibility Requirements
CHED UniFAST Student Loan Program
  • 0% interest if paid within the loan term
  •  

  • Up to P60,000 loanable amount
  •  

  • Payable for up to 12 months
  • Filipino undergraduate or graduate students enrolled in CHED recognized educational institutions.
  •  

  • Did not get SLP during their undergraduate years
Landbank i-STUDY Program
  • 5% interest per year
  •  

  • Up to P300,000 per borrower
  •  

  • Payable for 1-3 years
  •  

  • Loan default fee: 24% per year
  • Filipino students who are not under 50 that will enroll in DepEd, CHED, or TESDA recognized educational institutions.
SSS Educational Assistance Loan Program
  • 6% interest per year for half of loanable amount
  •  

  • Up to P20,000 per term (P200,000 for 5-year courses)
  •  

  • Payable within 3-5 years
  • 1 EALP per member-borrower
  •  

  • Member-borrower must be below 60 years old
  •  

  • Must have P25,000 basic income or below
  •  

  • At least 36 months of SSS contributions
  •  

  • Up to date loan repayments
GSIS Educational Loan
  • 8% interest per year
  •  

  • Up to P100,000 loanable amount per school year
  •  

  • Payable within 10 years with a grace period of 5 years
  • For GSIS members, children and relatives pursuing undergraduate studies
  •  

  • Borrower must be an active GSIS member for at least 15 years with updated contributions and clean government record

Private Banks and Financial Institutions

Private banks and financial institutions also offer student loans in the Philippines. Banks usually do not award loans based on an applicant’s needs. Rather, they have a set of eligibility requirements that determine whether or not they will approve your loan.

 

While they usually have higher interest rates and additional fees and charges, student loans from Philippine banks also offer flexible repayment options that could work best for your situation. Here are some example of student loans in the Philippines offered by banks and other financial institutions:

 

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Loan Key Features Eligibility Requirements
Tonik Loans
  • as low as 1.7% monthly interest
  •  

  • Up to P250,000 loanable amount
  •  

  • Payable for up to 18 months
  • Must be 23-58 years old
  •  

  • Employed
  •  

  • Filipino citizen
  •  

  • With proof of income, identification, and bank account
BPI SIP Loan for School
  • 0.75% monthly interest
  •  

  • Up to your available BPI Credit Card balance
  •  

  • Payable for up to 24 months
  • BPI Credit card holder in good standing
InvestEd Student Loan
  • 2.42% to 2.67% interest rate per month
  •  

  • Up to P40,000 loanable amount
  •  

  • Payable for up to 28 months
  • Filipino student enrolled in the last two years of university in the Philippines
  •  

  • Must be at least 18 years old
Bukas Tuition Installment Plan
  • Interest rates vary per school
  •  

  • Up to P100,000 loanable amount
  •  

  • Payable within 3-12 months
  • Filipino student who will enroll at any Bukas partner school
  •  

  • Must be at least 18 years old
  •  

  • Must have a source of income

Educational Institutions

Some schools and universities in the Philippines offer their own loan programs to assist students in financing their education. These programs may have specific eligibility requirements and application processes. It's important to check with individual institutions for more information.

 

On a mobile device? Swipe   left to view full table
Loan Key Features Eligibility Requirements
UP Short-term Cash Loan
  • Up to 3,000 per semester
  • Filipino undergraduate or graduate students in UP
  •  

  • Can be availed one month after registration
De La Salle University Student Loan Program
  • 1% interest imposed 1 month after payment deadline
  •  

  • Maximum loanable amount is up to 100% of tuition and fees
  •  

  • Can be availed only once per academic year
  • Undergraduate and Graduate DLSU students with at least 1 term of enrollment
  •  

  • Must have no unsettled loans
Mapua University Student Financial Assistance Program
  • 0% interest rate
  •  

  • Up to P8,000 loanable amount
  •  

  • Payable for up to 10 years from graduation date
  • Third, fourth or graduating Mapua student
  •  

  • No existing government scholarship
  •  

  • Has a co-borrower

Joint Loans

An increasingly popular option for financing education is through joint loans, where a student and a co-borrower—typically a parent, guardian, or spouse—apply for a loan together. A joint loan can increase the likelihood of loan approval and potentially secure better loan terms, as the combined financial strength of both applicants is taken into account.

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How to Choose the Right Student Loan

checklist that describes the right student loan in the Philippines

 

Choosing the right student loan in the Philippines is an important decision that can have long-term financial implications. Here are some factors to consider when selecting a student loan:

  • Interest Rates: Compare the interest rates offered by different lenders. Remember: Lower interest rates can save you money in the long run, hun!

  •  

  • Loan Terms: Consider the length of the loan term and the repayment options available. Longer loan terms may result in lower monthly payments but can also mean paying more in interest over time.

  •  

  • Monthly Payments: Calculate the estimated monthly payments for each loan option. Make sure the payments are manageable within your budget.

  •  

  • Borrower Protections: Look for loans that offer borrower protections such as deferment, forbearance, and loan forgiveness options. These protections can provide flexibility in case of financial difficulties.

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Managing Your Student Loan in the Philippines

Once you have chosen a student loan, it's important to learn how to manage it effectively. Here are just a few ways you can do it:

 

  • Borrow Only What You Need: It may be tempting to borrow a huge loan amount, especially if you’re eligible for it. But this is something we don’t recommend, luv. Borrow only what you need to cover your education expenses. This will help you avoid unnecessary debt and make repayment more manageable.

  •  

  • Triple Check Your Lender: Before taking out a student loan, make sure your lender is legit. Be wary of lenders that offer loans that are too good to be true! They could most likely be scams!

  •  

  • Make Timely Payments: Pay your monthly loan installments on time to avoid late fees and penalties. Consider setting up automatic payments to ensure you never miss a payment. Automatic debit can also sometimes qualify you for a small interest rate reduction.

  •  

  • Create a Budget: Develop a budget that includes your loan payments. Allocate funds specifically for loan repayment and prioritize them in your budget. This will help you stay on track and ensure you have enough money to cover your monthly payments.

  •  

  • Pay During Grace Period: If possible, start making payments on your student loans during the grace period or while you're still in school. This can help reduce the amount of interest that accrues and gets added to your principal balance.

  •  

  • Consolidate Your Loans: Consolidating multiple student loans into one payment can help you simplify repayment. It can also potentially lower your monthly payments by extending the repayment term.

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Understanding   the Consequences of Default

Defaulting on a student loan can have serious financial consequences for borrowers. Some of the consequences of default include:

 

  • Collection fees

  •  

  • Wage garnishment or salary deductions

  •  

  • Damage to credit scores

  •  

  • Ineligibility for other loans or financial aid programs

 

It's important to understand the consequences of default and take steps to avoid it. If you are struggling to make payments, consider reaching out to your lender to discuss alternative repayment options.

 

Suggested Read: The Process of Debt Collection for Unpaid Cash Loans in the Philippines

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Strategies for Loan Consolidation

Consolidating your student loans can be a helpful strategy for managing your debt. Here are some strategies you must keep in mind:

  1. Make a List of Your Loans: Start by making a list of your current loans and credit cards. Include the total balance, interest rate, minimum monthly payment, and total remaining payments. This will help you determine which loans to consolidate and which to keep separate.

  2.  

  3. Compare Options: There are several options for consolidating your loans, including personal loans, home equity loans, balance transfer credit cards, and debt management programs. Research and compare the pros and cons of each option to determine which one is best for you.

  4.  

  5. Consider Interest Rates: One of the primary benefits of consolidating your loans is potentially lowering your interest rate. Look for loans with lower interest rates than your current loans to save money over time.

  6.  

  7. Avoid New Debt: Consolidating your loans won't be effective if you continue to accumulate new debt, luv! Avoid using credit cards or taking out new loans while you're repaying your consolidated loan.

 

Remember, consolidating your loans may not be the best option for everyone. It's important to consider the pros and cons and consult with a financial advisor or loan counselor before deciding.

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One Final Note, Luv

Pursuing higher education can be expensive, but student loans can help make it more accessible. By understanding the different types of student loans in the Philippines and following these tips for choosing and managing your student loan, you can successfully pay off your debt and achieve your educational goals. Don't let financial concerns hold you back from pursuing your dreams. But also, don’t forget to loan responsibly, luv!

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