Are student loans in the Uk halal? Is Student Finance Halal?

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Anonymous_234129
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Hi I just want to know whether Student loans from student finance are Halal? If they are not what can we do to get around this?
I have already started university on September 2020 and need some urgent help
Thank you
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ROTL94
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Funnily enough I just read a thing about this:
https://www.thestudentroom.co.uk/sho....php?t=6748532
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EDGELORD3000
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hi there,

from my research, university loans are not halal as it involves interest (ribaa) which is haram- there are plenty of verses in the Qur'an that talk about consuming usury (interest) and the consequences of doing so (for example, 2:275). please look up naseeha session's video on youtube that talks about the student loan.

in addition, please also ignore any website issuing fataawaa (verdicts) on trying to justify it being halal/permissible. at the end of the day, it still has interest charged which accumulates from the day you take out the loan. please read the article below taken from this website: https://www.abukhadeejah.com/the-gra...d-what-is-not/

"15. Student loans in the UK are forbidden (harām) because it is a clear and apparent interest-based (ribā) transaction. A loan is taken from a students loans company and repayments are made at RPI (Retail Price Index) plus 3% interest. RPI is a measure of inflation, and the 3% is what they refer to as interest, usually totaling 6.1% interest. After graduation, this is paid back in installments over a period of time, as the interest plus RPI is continually being added. This is a ribā (or interest) based transaction and clearly forbidden in Islam by the Revelation and Ijmā’ (consensus)."

If you've already started your course, you'll need to seek advice from a trustworthy shaykh on what to do, since I'm not knowledgeable enough to tell you what to do. I myself am on the gap year working to save up money and fund my own degree- I strongly encourage you to do the same. Remember that no matter how hard leaving something off for the sake of Allah is, He will not abandon you while doing so. In terms of financial matters, Allah will take care of that too as He says in the translation of verses 2 and 3 in Surah Tahrim:

"...And whoever is mindful of Allah, He will make a way out for them. And provide for them from sources they could never imagine. And whoever puts their trust in Allah, then He ˹alone˺ is sufficient for them. Certainly Allah achieves His Will. Allah has already set a destiny for everything."

May Allah make your affairs easier
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Anonymous_234129
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(Original post by EDGELORD3000)
hi there,

from my research, university loans are not halal as it involves interest (ribaa) which is haram- there are plenty of verses in the Qur'an that talk about consuming usury (interest) and the consequences of doing so (for example, 2:275). please look up naseeha session's video on youtube that talks about the student loan.

in addition, please also ignore any website issuing fataawaa (verdicts) on trying to justify it being halal/permissible. at the end of the day, it still has interest charged which accumulates from the day you take out the loan. please read the article below taken from this website: https://www.abukhadeejah.com/the-gra...d-what-is-not/

"15. Student loans in the UK are forbidden (harām) because it is a clear and apparent interest-based (ribā) transaction. A loan is taken from a students loans company and repayments are made at RPI (Retail Price Index) plus 3% interest. RPI is a measure of inflation, and the 3% is what they refer to as interest, usually totaling 6.1% interest. After graduation, this is paid back in installments over a period of time, as the interest plus RPI is continually being added. This is a ribā (or interest) based transaction and clearly forbidden in Islam by the Revelation and Ijmā’ (consensus)."

If you've already started your course, you'll need to seek advice from a trustworthy shaykh on what to do, since I'm not knowledgeable enough to tell you what to do. I myself am on the gap year working to save up money and fund my own degree- I strongly encourage you to do the same. Remember that no matter how hard leaving something off for the sake of Allah is, He will not abandon you while doing so. In terms of financial matters, Allah will take care of that too as He says in the translation of verses 2 and 3 in Surah Tahrim:

"...And whoever is mindful of Allah, He will make a way out for them. And provide for them from sources they could never imagine. And whoever puts their trust in Allah, then He ˹alone˺ is sufficient for them. Certainly Allah achieves His Will. Allah has already set a destiny for everything."

May Allah make your affairs easier
Thank you for your response.
With regards to the gap year how much money should you be making to fund your degree?
Also how do you fund your degree like what application process would you have to go through?
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Smokestar
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I'm a Muslim. Why give af? If your parents cant afford to pay for university like my parents then surely its best to get the loan so that you can be educated and persue the career which will benefit yourself and society?
Surely doing the wrong thing to get huge positive results is best course.
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QE2
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(Original post by Anonymous_234129)
Hi I just want to know whether Student loans from student finance are Halal? If they are not what can we do to get around this?
I have already started university on September 2020 and need some urgent help
Thank you
Islamic rules usually have a "necessity" escape clause. If you have no option but to get a student loan, then it is ok.
Another approach would be to do what Islamic banks do. Simply call the interest something else, like "profit" or a "charge". Then it is halal.
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(Original post by EDGELORD3000)
hi there,

from my research, university loans are not halal as it involves interest (ribaa) which is haram- there are plenty of verses in the Qur'an that talk about consuming usury (interest) and the consequences of doing so (for example, 2:275). please look up naseeha session's video on youtube that talks about the student loan.

in addition, please also ignore any website issuing fataawaa (verdicts) on trying to justify it being halal/permissible. at the end of the day, it still has interest charged which accumulates from the day you take out the loan. please read the article below taken from this website: https://www.abukhadeejah.com/the-gra...d-what-is-not/

"15. Student loans in the UK are forbidden (harām) because it is a clear and apparent interest-based (ribā) transaction. A loan is taken from a students loans company and repayments are made at RPI (Retail Price Index) plus 3% interest. RPI is a measure of inflation, and the 3% is what they refer to as interest, usually totaling 6.1% interest. After graduation, this is paid back in installments over a period of time, as the interest plus RPI is continually being added. This is a ribā (or interest) based transaction and clearly forbidden in Islam by the Revelation and Ijmā’ (consensus)."

If you've already started your course, you'll need to seek advice from a trustworthy shaykh on what to do, since I'm not knowledgeable enough to tell you what to do. I myself am on the gap year working to save up money and fund my own degree- I strongly encourage you to do the same. Remember that no matter how hard leaving something off for the sake of Allah is, He will not abandon you while doing so. In terms of financial matters, Allah will take care of that too as He says in the translation of verses 2 and 3 in Surah Tahrim:

"...And whoever is mindful of Allah, He will make a way out for them. And provide for them from sources they could never imagine. And whoever puts their trust in Allah, then He ˹alone˺ is sufficient for them. Certainly Allah achieves His Will. Allah has already set a destiny for everything."

May Allah make your affairs easier
You ignore some verdicts but take others, and are depriving yourself of an education this year because of your views. There are hundreds of Muslim students who use student finance, this advice is simply damaging and encouraging others onto your own ill-guided path.

You aren't even given ownership of the money, this teaching stems from people not being able to pay it back, you won't even pay anything back until you earn around £25k, and even gets written off in many cases.

You aren't the only Muslim in this country who was in this position
Last edited by BlueIndigoViolet; 2 months ago
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ITS2019
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Loans are essential for many muslims, it simply isn't feasible for most people to not take out loans. If you are worried about student loans then what happens if you want to buy a house and are required to take out a mortgage in the future? What about Car loans, credit cards?
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Anonymous_234129
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I've got a question
Would you be in debt when you die so would you still have to pay back the loan if you pass away?
I think you don't need to but just want other peoples verdict
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Anonymous_234129
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(Original post by QE2)
It's Allah who caused the problem in the first place.
Don't say that
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RogerOxon
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(Original post by Anonymous_234129)
Don't say that
Why not? It's what Islam claims.
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Zamestaneh
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(Original post by EDGELORD3000)
hi there,

from my research, university loans are not halal as it involves interest (ribaa) which is haram- there are plenty of verses in the Qur'an that talk about consuming usury (interest) and the consequences of doing so (for example, 2:275). please look up naseeha session's video on youtube that talks about the student loan.

in addition, please also ignore any website issuing fataawaa (verdicts) on trying to justify it being halal/permissible. at the end of the day, it still has interest charged which accumulates from the day you take out the loan. please read the article below taken from this website: https://www.abukhadeejah.com/the-gra...d-what-is-not/

"15. Student loans in the UK are forbidden (harām) because it is a clear and apparent interest-based (ribā) transaction. A loan is taken from a students loans company and repayments are made at RPI (Retail Price Index) plus 3% interest. RPI is a measure of inflation, and the 3% is what they refer to as interest, usually totaling 6.1% interest. After graduation, this is paid back in installments over a period of time, as the interest plus RPI is continually being added. This is a ribā (or interest) based transaction and clearly forbidden in Islam by the Revelation and Ijmā’ (consensus)."

If you've already started your course, you'll need to seek advice from a trustworthy shaykh on what to do, since I'm not knowledgeable enough to tell you what to do. I myself am on the gap year working to save up money and fund my own degree- I strongly encourage you to do the same. Remember that no matter how hard leaving something off for the sake of Allah is, He will not abandon you while doing so. In terms of financial matters, Allah will take care of that too as He says in the translation of verses 2 and 3 in Surah Tahrim:

"...And whoever is mindful of Allah, He will make a way out for them. And provide for them from sources they could never imagine. And whoever puts their trust in Allah, then He ˹alone˺ is sufficient for them. Certainly Allah achieves His Will. Allah has already set a destiny for everything."

May Allah make your affairs easier
No one argues that Ribaa is permissible. They argue whether the percentage growth constitutes Ribaa in the first place. Fiqh is a lot more nuanced than just making blanket statements, and Fatawa take into consideration of the specifics that make up each issue on a case by case basis, such that US student finance may be Haram and UK student finance may be Halal.

With regards to avoiding doubtful things for the sake of Allah, this is good and from the Sunnah; what is also from the Sunnah is making things easy for the people, thus if there is an instance where one option will have a lot more good than harm and the other will have a lot more harm and difficulty, then it's advisable to go for the easier option so long as it is not clearly Haram or Haram by Ijmah (which UK student finance isn't).

Though Abu Khadeejah is entitled to his opinion, just a general pointer but the guy has been advised against by Sheyukh because he makes Tabdih of everyone and is narrow minded. The number of people whom he considers guided is rather slim and if anyone has a difference if opinion with him they are an innovator.

With regards to Naseeha Session's video, I decronstructed that in the link posted above by ROTL94. In summary, their video has no applicability to the UK as they sought a Fatawa whilst providing incorrect/incomplete information to the Sheikh.
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Zamestaneh
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(Original post by Anonymous_234129)
Hi I just want to know whether Student loans from student finance are Halal? If they are not what can we do to get around this?
I have already started university on September 2020 and need some urgent help
Thank you
This is a long post but since this is a big topic please read all the way through.
As linked by ROTL94:

Bismillahir Rahmanir Rahim

As a preface, I would like to clarify I am not a scholar nor a student of knowledge and therefore I am open to being respectfully corrected on this issue with sufficient evidence. I hope this post serves as a clarification for everyone regarding the situation surrounding student finance in the United Kingdom at the time of me writing this (2018); obviously the nature of student finance in the United Kingdom can or might change in the future which is why I am clearly stating the date. It is very important, however, to state that this post will NOT give a yes or no answer regarding whether student finance in the UK is Haram or Halal, rather it is hoped that it will provide you students/future students with the relevant facts for you to be able to decide which opinion to follow yourselves as there is currently a lot of confusion and misinformation surrounding this topic.

Before we delve into the Fatwah issued by Sheikh Haitham Al Hadad, a learned Jordanian scholar currently situated in the UK and one of the students of Sheikh Bin Baz, it is very important to outline the key points about student finance as these are the working gears and cogs in any Fatwah for or against it being Haram or Halal.

(1) A contract is made between the government and the student.

(2) Money is paid directly to the university to cover tuition fees.

(3) The total amount that the government expects to receive back from the student increases by the rate of inflation per year up to several percent at the goverment's discretion.

(4) Once the student earns over a certain amount (£25,000 currently), the government takes a percentage of the salary over it (9%). E.g. if you earn £1000 above the threshold, the government will take £90. Once it falls below that threshold, no money is taken until your salary exceeds the threshold again.

(5) Once the amount of money the government has taken from the student equals the total amount of money the government has expected back from the student, the contract between the student and the government terminates, and the student keeps all of their salary thereafter.

Important Note: In the above, I have avoided saying the word 'interest' and 'loan'. The reason for this is because although these are used both by the government and people generally when discussing student finance, they have certain connotations which are conflated with Ribaa (usery), which is the crux of the problem being discussed.

Now we get to Sheikh Haitham's Fatwah stating that student finance in the UK is Halal. He likens the points above to a business transaction or an investment rather than a loan despite it being considered a loan by the government. If something looks like a duck, smells like a duck and quacks like a duck but you call it a frog, it doesn't make it a frog - similarly, his point is that the reality of student finance differs from the labels the government or people give them. Below is (my understanding of) his subsequent logic:

(1) The contract made between the government and the student is essentially akin to a business agreement rather than a loan.

(2) One does not give the government a fixed amount of money e.g. £50 per month.

(3) The amount the governement takes from the student is a fixed percentage of their salary - this is like two business partners splitting profits.

(4) Even if the £25,000 threshold (as of 2018) was not there, the student would not have to pay anything if they did not earn anything - this is like two businesses partners sharing the losses.

(5) The total amount of money the government expects from the student is effectively the value of a 'buy out' clause of the contract - this is like if one business partner said ''Once I have gained £50,000 from this business, our partnership is over and you can have full control of the business now''.

(6) If the students agrees to the term that the government can increase the value of the 'buy out clause' by a fixed percentage each year, this does not constitute Ribaa. Therefore even if the government paid £10,000 towards your tuition fees and they derive £15,000 from you, this is permissible, as you were simply continuing your business partnership of splitting your salary at a ratio of 91:9.

From this perspective, it is perfectly fine to take out student finance as there is no Ribaa involved in his opinion.

Has there been criticism or this Fatwah? Yes. Is all of that criticism valid though? That is the question that needs to be asked now.

Some more overzealous brothers, noteably Imran Bin Mansur (DawahMan) - who I have only named because people often come across his videos and he hasn't taken down things he has been advised are incorrect - hopefully intended good InshaAllah but unfortunately went on a blunderous and damaging tirade against Sheikh Haitham Al Hadad and accused him of not being a Sheikh, questioning his credentials and whether he was a student of Sheikh Bin Baz, accused him of permitting that which is Haram by consensus, and so on, with the end result being to discredit the Sheikh and to refute his Fatwah regarding student finance.

In attempting to address the issue, these brothers went to a scholar who specialises in finance from the Gulf to ascertain whether student finance in the United Kingdom is Haram. The scholar heard them describe the key points of student finance (like I listed at the start), then subsequently denounced the Fatwah saying it is permissible and denounced the one who issued it. The major issue with this, however, was that the key point that a percentage of the student's salary is taken rather than a fixed payment was missing from the brothers' explanation of student finance which is central to whether it would be considered a Halal transaction or Ribaa according to Islamic Financial principles, therefore the whole counter-Fatwah was rendered invalid - a Fatwah cannot be made more authoritative over another when it is based upon incomplete facts whilst the other is based upon complete facts.

Similarly, a dear brother of mine asked a scholar from Saudi Arabia but similarly made the same mistake of giving incomplete information, therefore the resulting Fatwah could not be used to counter the Fatwah of Sheikh Haitham Al Hadad. I highlight this issue because whilst doing research, you may come across criticisms like this or you may be forwarded messages from friends stating how this Fatwah 'makes Ribaa permissible' when Allah SWT has made it Haram, thus you should be aware that it is an invalid critique.



All of this said, I again must emphasise that it is still a valid opinion to say that student finance is Haram, but this is for you to personally research and decide - my only intention was to say that if you do choose to take out student finance in the UK, do not feel so conflicted about it as there is a valid opinion that it is fine; if you choose to err on the side of caution then may Allah SWT reward you for your sacrifice and facilitate your goals through other means.

As I conclude this post, a reminder to myself and you all is if there is a valid difference of opinion, we need to be mature in how we approach it - so if one follows an opinion that we do not follow, respectfully leave them to it and do not try to refute them, as that is for the scholars to discuss.
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Sinnoh
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(Original post by Anonymous_234129)
I've got a question
Would you be in debt when you die so would you still have to pay back the loan if you pass away?
I think you don't need to but just want other peoples verdict
No, and the debt is cleared 30 years after you graduate anyway.
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Anonymous_234129
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(Original post by Sinnoh)
No, and the debt is cleared 30 years after you graduate anyway.
oh okay so even when you pass away no one needs to pay the student loan for you? so you be debt free?
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(Original post by Anonymous_234129)
oh okay so even when you pass away no one needs to pay the student loan for you? so you be debt free?
The loan is paid back as a percentage of your income above a threshold, there's no income to take percentages off if you're dead.
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(Original post by Anonymous_234129)
oh okay so even when you pass away no one needs to pay the student loan for you? so you be debt free?
Yes. In the UK, AFAIK, you can't inherit debts.
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(Original post by Anonymous_234129)
Hi I just want to know whether Student loans from student finance are Halal? If they are not what can we do to get around this?
I have already started university on September 2020 and need some urgent help
You can decide what you want to believe, as there is zero credible evidence for any religious belief.

You need to decide what you believe on this, not be told what other people "think".
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