Introduction

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Read on to learn how to fund University Education without using student loans and to lobby for launch of alternative finance for University fees by September 2020.

Currently, many Muslims are unable to go to university because their faith prohibits them from taking interest based finance to fund university tuition fees.

In September 2014, the government undertook to introduce an alternative Takaful based university fee funding structure by September 2016 as outlined here, but have not yet done so, and have repeatedly refused to commit to a date when this model will eventually be introduced.

Download our self help tool kits

Scroll down for self-help information on how to fund university fees payable now.

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Alternative Finance for Student Loans - An Overview

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Practical Options Toolkit

For those wishing to attend university without taking up student loans, please consider some of the following options in our toolkit below.

University choice

Finding a prospective University located close to home can significantly lower living costs in terms of accommodation, food and travel and therefore eliminate the need for a maintenance loan. This will help to significantly lower cost barriers in accessing higher education.

Fee reductions / waivers

Fee reductions / waivers are offered by most universities to attract students by reducing the tuition fee either partially, or in some cases by the full amount.

In many cases, they will allow for annual fees to be capped at £3000; a big reduction from the standard £9,000 annual fees.

Fee waivers are granted at the discretion of the university to those with valid reasons. We know of several university students who have been granted fee reductions on account of their scriptural aversion to taking interest based loans.

Application must be submitted with the university and each university has its own application procedure.

For more information search for fee waivers with your potential University online.

Work funded part time university course / Higher level apprenticeship

Working whilst studying part time can be an excellent way to earn cash to fund your studies, whilst a relevant field to your chosen degree will also allow you to learn about your strengths and weaknesses whilst providing you with an invaluable insight and experience for your career post-graduation.

Also, many employers are offering higher level apprenticeships to college leavers, (those who have finished A-levels) which can lead to a professional career, as a chartered accountant for example, without the need for a degree.

For further information please take look at the higher apprenticeship guide and also visit the national career service here.

Scholarships

Scholarships are extended to students who meet the criteria for excellence in academic achievements.

See the available scholarship for your chosen subject through the scholarship search portal.

Further information on waivers, bursaries and scholarships can be found on the complete university guide website here.

Bursaries

A bursary is a non-repayable grant provided by some universities and charitable organisations to support students with low incomes by contributing to their living costs, or to pay for books or equipment they need whilst they study.

See the offerings from your prospective university for amounts and eligibility.

The government no longer offer bursaries to students from low-income backgrounds.

Zakat Funds

For potential support for those who are eligible for Zakat, please look into the National Zakat Foundation Scholarship fund.

Qard Hassan, is also an emerging interest free student loan provider, further information can be found here.

Support from family / friends

Family and friends can also help with interest free loans / support.

Scriptural (Shari’ah considerations)

Many Muslims are struggling with the student loan issue due to the prohibition of interest as evidenced by the large number of responses to the government consultation on this matter in September 2014.

To help clarify the Islamic position, we have provided below a summary of the three main scriptural (sharia) positions on this issue, and provided links to supporting edicts (fatwa).

(1) Student loans are impermissible:

The current student loan system is impermissible, as it amounts to an interest based contract (ribā) which is prohibited. See Al Qalam’s overview and research paper for the Islamic viewpoint on student loans.

(2) Substantial Hardship

This view also holds the position that student loans are impermissible due to the prohibition of interest. If an individual student is suffering substantial hardship as a result of not going to university, then some Ulema under the ruling, “Necessity legalises the prohibited,” have given permission for one to take a student loan. See a detailed breakdown of this position here.

Given many jobs are available which do not require a university degree, many scholars do not accept the necessity exemption can be applied.

(3) Student loans are non interest based

Another view holds the existing interest based model is actually permitted as although student loans constitute interest on paper, the underlying structure of the contract more closely resembles a silent partner investment contract, known as mudharabah. For a breakdown of this view and for further information see here.

A further breakdown of the mudharabah contract can be found here.

Lobbying

In September 2014, the government undertook to introduce an alternative takaful based university fee funding structure by September 2016 as outlined here, but have not yet done so, and have repeatedly refused to commit to a date when this model will eventually be introduced.

We feel these delays demonstrate a lack of urgency on the part of the government in addressing the plight of those students currently unable to benefit from a university education.

The Bright and Halal campaign therefore seeks to encourage students to lobby their Members of Parliament to work to introduce sharia finance for funding university tuition fees by September 2018.

In order to encourage the government to prioritise the introduction of this scheme as quickly as possible, we suggest one of the following two actions.

Write to your MP

A personal letter (not a cut and paste template) always works best. This website has sufficient information for this letter to be easily composed. The key points to mention are:

(1) The government consultation in September 2014 indicated an alternative finance university tuition fee model would be introduced in September 2016

(2) Please can the government prioritise making this happen and recognise the negative impact on many Muslim students of not being able to benefit from a university education.

(3) Encourage your MP to submit a written question to the Universities Minister in this regard.

Visit your MP

Find out when your MP is holding a local surgery and visit them to voice your concerns. A face to face meeting is more likely to elicit support compared to an email.

You can find details of your local MP here.

Email

For further support or information, please send an email to info@1stethical.com

What The Media Say

The Guardian The Independent Huffington Post NUS Asian Express Money Saving Expert

1st Ethical The Asians Daily Mail The Telegraph Islamicate

FAQs

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Why are some Muslims unhappy with the current student loan scheme?

The Qur’an, which is the primary source of guidance for all Muslims, clearly prohibits both giving and receiving interest. The current student loans scheme has elements of interest built into the scheme.
Consequently, there are many thousands of Muslims who have not been able to go to university since September 2012, when the current £9,000 based regime came into effect, and this number is growing each and every year.

So what is the government proposing as an alternative scheme?

The government is proposing a Takaful based model. This model is based on the principle of mutual co-operation and guarantee.

How does the Takaful model work?

Whilst a conventional loan contract requires the applicant to pay interest on the amount borrowed, the Takaful contract requires the applicant to make a unilateral promise to make future charitable donations in exchange for the Takaful fund paying for the applicants tuition fees. The rates of repayment and price point of both models are identical.

So what’s halal about this – it seems to be dressing up the existing ‘haram’ loan in a ‘halal’ wrapper?

The shariah treats a donation based contract differently to a compensatory contract. Put simply, it is possible for a prospective student to receive a donation from a fund set up to fund tuition fees, and to agree to make future contributions to that fund even if the value of the future contributions is more or less than the amount received. This only works if the contract is truly donation based not compensation based.

There is a fatwa on the Al-Qalam website which explains the underlying Islamic rationale in more detail.

But what about the price point being the same. Surely a ‘halal’ (permitted) product must lead to a different repayment schedule?

Not necessarily. Sometimes it is the underlying process and not the end result which determines whether something is halal or not. To give an example, a chicken burger from a McDonald’s in Dubai may be halal to consume, whereas the very same burger, with the same taste, appearance etc. would not be halal to consume in a McDonald’s in the UK. Having said this, using an interest based benchmark for determining the price would be disliked though not impermissible.

Some Muslim students I know are not bothered in the slightest about the ‘interest’ issue – are you making a fuss over nothing here?

It is certainly true some Muslims are not concerned about this issue. It is also true some Muslims are not going to university solely because of this issue, and the government, on page 8 of their consultation paper, accepts ‘there is some evidence that this may be the case’. In our experience, most Muslim students sit in-between these two positions, and, just like with the dilemma faced when buying a house to live in via a mortgage, may feel compelled to take up a student loan even though this is done with a heavy heart because of the interest issue.

The scholar I follow says it is permissible to take an interest based loan, because getting an education is more important. Why the need then to develop an alternative model?

As with most matters, there is a range of scholarly views on this matter. Whilst there is certainly a discussion to be had on the merits of these positions, we believe the primary focus here should be on assisting those students who are currently effectively being denied the opportunity to go to university. All of us will accept that we should have equality of opportunity in this regard, hence we request everyone support this campaign.

I don’t want the government to have my details; I don’t want to be involved in politics.

The government is not able to guarantee to keep your details confidential. However, we believe taking part in this campaign will not lead to adverse consequences. We believe it is important for everyone to get involved with such exercises, as we will all be affected by the policy decisions that are taken as a result of this campaign.

But this campaign will let the government know who the ‘practicing’ Muslims are, and this may cause us problems in the future?

We believe we are very fortunate to live in a democratic, pluralist society where our rights are safeguarded by the law and courts. If there was any attempt made to disadvantage people who took part in this campaign, which we believe is highly unlikely, then our response should be to assert our rights under the law as British citizens.

Do Muslims tend to go to university more than other faith groups?

Muslims are the youngest of all faith groups in the UK, with the recent 2011 census confirming a whopping 33% of British Muslims are aged under 16, compared with only 19% as a national average. Given the young tend to consume education more than older age groups, this issue impacts the Muslim community much more than any other faith group.

Are you making any money out of this campaign?

No, we are all doing this as a charitable project, because we believe this to be an important issue for all of us. The time, money and effort spent on this campaign is coming from our own pockets.

Where can I find out more about this matter?

Student Loans Podcast

Halal Student Loans – The Challenge Ahead