Fatwa ID: 08849
Answered by Alimah Humairah Badshah
Question:
When it comes to student loan in the UK there are difference of opinion on it’s permissibility. I have taken a student loan but my opinion changes every time I do more research. When I read something, sometimes I think it’s okay and other times I read something and I think it’s haraam.
I understand Allah has made riba haraam for us because it harms us financially and exploits a person but when it comes to student loan there a certain condition that makes it more like a tax,like you have to earn a certain amount to start paying it off and it can get written off when you die or after 30 year.
Many fatwa that say it’s haraam don’t take in to consideration the condition and factor of a student loan. One that it’s not actually a loan even though it’s called one. I am in my first year of university and am still in two minds about the whole situation.
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
Students loans are legally and literally a loan, despite the repayment requirements and methods being contractually structured in a way similar to a tax. Regardless, whether a student loan is technically a loan or a tax does not affect the permissibility of taking a student loan. The payment of riba, whether it be due to an interest-based loan or an interest-based tax, is not permissible.
The various exceptions in the loan payment also do not affect the fact that the loan is interest-based. Interest is charged on student loans from the day of the first instalment, usually at RPI (i.e.: estimated inflation) plus an added 3%. The 30- or 40-year time limit can be seen as a kind of condition or oath where the creditor has made forgiving the debt and forgoing their rights binding upon themselves after a period of time or upon the death of the debtor. Similarly, the creditor deferring the loan through only seeking repayment once the debtor is financially stable and earning enough wealth is a reasonable condition which does not affect the existence of the loan or the fact that interest will accrue over time.
Keep in mind that while agreeing and promising to pay interest is certainly not advisable, what is worse is actually paying the interest if doing so can be avoided. Therefore, if one is afflicted by such a loan but manages to adhere to the conditions in such a way that they never pay any interest until the loan is forgiven entirely, they will have avoided the sin of paying riba.
Jabir [ra] said that Allah’s Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: “They are all equal.” [Sahih Muslim 1598]
If one cannot avoid paying their student loans in such a manner, they should strive to pay off the loan as soon as possible to avoid the accumulation of interest. One may investigate the possibility of interest-free loans from family members, acquaintances, or others. A person who has fallen into riba should repent sincerely and make a firm intention never to involve themselves in such things in the future.
In the future, university students may wish to look into the alternative student finance (ASF) scheme which is intended, inshaAllah, to be introduced in the academic year 2026-2027. This scheme is intended to be Shariah-compliant and will allow new students to avoid paying interest.
References:
https://www.gov.uk/student-finance/print
https://www.gov.uk/government/publications/alternative-student-finance/alternative-student-finance
حَدَّثَنَا أَحْمَدُ بْنُ يُونُسَ، حَدَّثَنَا زُهَيْرٌ، حَدَّثَنَا سِمَاكٌ، حَدَّثَنِي عَبْدُ الرَّحْمَنِ بْنُ عَبْدِ اللَّهِ بْنِ مَسْعُودٍ، عَنْ أَبِيهِ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَشَاهِدَهُ وَكَاتِبَهُ .
Sunan Abu Dawud (https://sunnah.com) b.8 no.23 (3333)
عَنْ جَابِرٍ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ
Sahih Muslim (https://sunnah.com) b.22, ch.19, no.132 (1598)
تَعْرِيفُ رِبَا الْفَضْلِ، لِأَنَّهُ هُوَ الْمُتَبَادَرُ عِنْدَ الْإِطْلَاقِ، وَلِذَا قَالَ فِي الْبَحْرِ فَضْلُ أَحَدِ الْمُتَجَانِسَيْنِ. نَعَمْ هَذَا يُنَاسِبُ تَعْرِيفَ الْكَنْزِ بِقَوْلِهِ فَضْلُ مَالٍ بِلَا عِوَضٍ فِي مُعَاوَضَةِ مَالٍ بِمَالٍ
Radd Al-Muhtaar (Halabi ed., Daar Al-Fikr, https://shamela.ws) v.5 p.168
يَكْفِيه فِيمَا بَيْنَهُ وَبَيْنَ اللَّهِ تَعَالَى التَّوْبَةُ، وَالْإِنَابَةُ
Kitab Al-Bahr Al-Raa’iq (Daar Al-Kutub Al-Islaamiyyah, https://shamela.ws) v.5 p.5
Only Allah (عز و جل) knows best.
Written by Alimah Humairah Badshah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
