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Finance Matters: The Post Secondary Education Account
In the previous article on Finance Matters, we covered practically all about the Edusave Account (if you haven’t read, go read it!). In this article, we will be educating you on the Post Secondary Education Account (PSEA).
So to begin off with some context, the PSEA is actually a part of the Post-Secondary Education Scheme in aims to help parents save up for their child’s post-secondary education. PSEA is primarily administered by the Ministry of Education and similar to the Edusave Account, it is opened automatically for all eligible Singapore Citizens (SC). The PSEA interest rate is the same as the Edusave Account and the CPF Ordinary Account (CPF-OA), currently at 2.5% per annum. Also, the PSEA will be closed in the middle of the year when the child turns 31. Children have two options: either allowing the automatic transfer of the PSEA to CPF-OA, or opting for the transfer of their PSEA balance to their sibling’s existing PSEA if applicable! Not to worry, they will receive an option letter on that as well as notification of the closure of their PSEA.
Who Adds The Money?
Unlike the Edusave Account where only the government tops it up, the PSEA ‘gets’ money from various places! But there are just 4 main types so don’t fret just yet. We’ll go through them thoroughly together:
1. Money Transferred From The Edusave Account
As mentioned in the Edusave Account article, your child’s Edusave Account will actually be closed in the year they turn 17 years old or when they are no longer studying in an MOE-funded school. It will be whichever happens later and would be automatically transferred to PSEA! You will be informed when the transfer is made via a letter as well. Just note though, if you only become SC after the age of 16, you would never have had an Edusave Account. So I guess this is considered one way for the PSEA to ‘get’ money ya?
2. Money Transferred From The Child Development Account (CDA)
If your child was eligible for CDA and has unspent balances, it will be transferred to the PSEA! For children born between 2001 and 2005, the CDA balance would have been transferred to the PSEA when the child turned 7 years old, and for children born after 2005, it would be when the child turns 13. Parents also do have the option to withdraw all the money as a cash gift though, so that’s why you might not see the CDA balance transferred to the PSEA if you opted for that.
Also, parents can contribute to the PSEA if their child has not reached the CDA contribution cap at the time of transfer, where the government offers a 1-to-1 matching grant until the cap is reached! Parents will have to do so before their child turns 18 though, and will definitely receive a letter informing you about the amount transferred to PSEA, how much more they can contribute to PSEA and how to make the contribution. Do note that parents cannot contribute to PSEA otherwise apart from this exception!
3. Money From Government Top-ups
In good finance years, the government does PSEA top-ups for various age groups and income criterias. It will usually be announced in the Budget by the government, and top-ups will be done automatically. It’s not a yearly thing by the way!
4. Awards/Bursaries From External Agencies
This section is not going to be applicable to everyone but basically National Service (NS) Men who have completed their service would receive the National Service Housing, Medical and Education (NS HOME) Awards if they are eligible. Also, Singaporeans who are eligible for the Annual Education Bursary under the Home Ownership Plus Education (HOPE) Scheme will have money transferred to their PSEA yearly!
What Can It Be Used For?
Alright so, the funds in the PSEA can be used to pay for your own or your siblings’ approved programmes in MOE’s list of approved institutions. Though the Junior College level (or Millennia Institute) is considered post-secondary, you can only use the Edusave Account for those! Approved institutions like Polytechnics, ITE and Local Autonomous Universities in Singapore as well as other eligible education providers are all listed in the MOE website clearly, so do give it a check if you want to make sure you’re eligible. But it would definitely be wiser to give your school a call about it, as you also have to ensure the course you are taking in the institution is under the approved programmes as well.
You will have to establish a Standing Order (SO) with the institution you’re intending to use the PSEA funds for, and you only need to submit it ONCE to the same institution! What it means is that you only need to submit the usage of PSEA SO in year 1! (You also can use PSEA to make partial payment of your fees, in cases where your fees are more than the amount in your PSEA. The remaining payment can be made using other modes of payment to the school directly. :))
And if you didn’t already know, you will not be able to use PSEA to fund post-secondary education outside of Singapore. This is because the government has more assurance of the quality and educational outcomes of schools governed by the country you know? Totally not saying that overseas schools are bad alright? They’re just not able to account for it, especially since you will be using the money given by them to fund for your education.
On the other hand, PSEA can also be used to repay education loans and financial schemes! The education loans include Tuition Fee Loans, Study Loans or even Overseas Student Programme Loans and financial schemes would include education loans taken under the CPF Education Scheme. Something to take note of is that you will have to have graduated from the institution you took the loan at before being eligible to use PSEA to repay for it. When you’re eligible, all you need to do is submit your application using your SingPass (or parent’s SingPass if you’re below 21) online! (The form can be obtained from the MOE Website as well.)
That’s all for PSEA! Might seem like a bunch of things but actually, it isn’t that bad after all yeah? If you have anything you’re unsure about, do consider checking with your relevant institution or the MOE directly, as a home tuition agency in Singapore FamilyTutor believes they will be of great help!
By the way, the ‘Simply Advice’ series conveniently gives you information that is useful any day any time. It aims to shed some light on pertinent topics and provide you with the best advice!
Zoe
Zoe is an undergraduate student in Singapore who loves thinking deeply and translating them into writing. She hopes her reflective opinions and sound advice weaved into relevant articles will be useful for you in one way or another!
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