Assalaamu alaikum all,
The question of whether students loans are harām or not comes up more or less every summer before the start of the University year. Most of us have always considered student loans by the Student Loans Company to be a loan on which interest is paid, this interest is considered to be riba.
The SLC was established in 1989 to provide loans and grants to students studying in the U.K. In the 1990s the maximum loan was just over £2,000 for those not living with their parents and £1,290 for those living with parents. Tuition fees were introduced in 1998 and students were required to pay up to £1,000 per year. In 2006 tuition fees were increased to £3,000 and then up to £9,000 in 2010. So the situation has changed drastically since the introduction of student loans in the 1990s. The annual tuition fees are now up to £9,250 and an annual maintenance loan of up to £10,702. So for a 3-year or 4-year University course the total debt can be around £50,000 to £60,000.
In 2016 a fatwa was issued by Shaikh Haitham al-Haddad, a well known Islāmic scholar based in the U.K., that the student loan made by the SLC in the U.K. is not really a loan in the Shari’ sense. This viewpoint is shared by some other prominent scholars but rejected by many scholars of equal stature. He states that even though the word “loan” is used it is not really a loan but more akin to a partnership investment. The government who gives the money (loan) to a student is, in fact, investing in its own citizen, who will share the profits he or she will make from working after qualifying. Since the student loan from the SLC is not really a loan so the issue of riba does not arise, thereby, making the student loan permissible. The eminent Shaikh put forward a number of arguments to try to support the position.
Please post questions such as the ones posed in this topic to the Ulamaa. Or click here for a vast library on islamqa.org. Alternatively, you can get support locating available answers online in the Q&A Support section of this form here
This cannot be undone and I am sure it will be greatly appreciated.
We apologise but you have been denied access to report posts in this thread. This could be due to excessively reporting posts and not understanding our forum rules. For assistance or information, please use the forum help thread to request more information. Jazakallah
