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Can I take a student loan to finance my University education?

Answered as per Hanafi Fiqh by Darulfiqh.com

Question:

Can I take a student loan to finance my course at University?

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

We acknowledge and understand the importance of seeking university education, yet it must be maintained that it cannot be done at the expense of the prohibition of interest.  Just as conventional car financing products and home mortgages are impermissible, likewise, the current student finance schemes offered by the government are non-Shariah compliant.

Whilst university education is important, it is a discretionary lifestyle preference.  One can earn a perfectly respectable livelihood without going to university.  In fact, a recent study published by Forbes in the US stated that 60% of graduates cannot find jobs in their respective field. Whilst in the UK, The Daily Mail published results suggesting that more than a quarter of graduates do not have a full-time job three and a half years after leaving university.

We are not discouraging university education, instead, we are negating the notion that university education is a necessity and that only with a university degree can one have a good standard of living.

If a person can adopt a mechanism by which he avoids paying above the principal amount of the loan, then there is scope for one to take such a loan.  However, since the interest rate in a student loan is pegged on the UK Retail Price Index (RPI), inflation almost certainly guarantees one paying over and above the principal amount.

Nevertheless, a real solution needs to be implemented for the thousands of Muslim students.  The relevant authorities currently need to be lobbied in order to facilitate an interest free alternative.

We are also canvassing Shariah Compliant alternatives.  Do make du῾ā’ Allah grants us and all working for a viable alternative a breakthrough.

 

And Allah Ta’āla Knows Best

Mufti Faraz ibn Adam al-Mahmudi,
www.darulfiqh.com

 

This answer was collected from DarulFiqh.com, which is operated under the supervision of Mufti Faraz ibn Adam al-Mahmudi, the student of world renowned Mufti Ebrahim Desai (Hafizahullah).

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