A staff association pays tuition fees on behalf of its members through what is called "Ju`alah contract." This association concludes an agreement with some schools whereby it registers the children of its staff members, there, according to the following criteria: 1-The school grants a discount on the tuition fees to students registered through the association. 2- The association commits itself to paying all tuition fees on behalf of the students registering through it. 3-The value of the fees is collected from the salaries of the association`s staff members as one payment or by monthly installments without any increase. Moreover, the members get the full benefit of the tuition discount, even if they paid by installments, while the association receives a commission in exchange for every student it registers in the school. What is the ruling of Sharia on this?
All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon Prophet Mohammad and upon all his family and companions.
The method of payment mentioned in the above question is based on the principle of Ju`alah (A fee paid for a task) where the association and its members benefit from the tuition discounts offered by these schools. The agreement the association concludes with them entitles it a certain discount as Ju`alah in exchange for every students it registers there. Moreover, the association guarantees full payment of students` tuitions immediately or by installments, then deducts these amounts from the salaries of its members (Students` fathers) without any increase.
Accordingly, it is permissible for the association to receive a discount on tuition fees with conditions:
First: The discount is to the benefit of the student and not the association to avoid falling into Riba (Usury).
Second: The association collects a commission based on the Ju`alah contract and not because it guarantees full payment of tuitions since jurists are agreed that it isn`t permissible to collect a wage over the latter.
Third: The association is entitled to the commission once the student is registered in the school.
Fourth: The Ju`alah contract concluded between the school and the association must be separated from that concluded between the school and the students` parents to avoid falling into the suspicion of usury. It isn`t permissible for the association to pay off the whole amount of tuition on behalf of the student then deduct its commission (Ju`alah) from it, because doing so makes this a usurious contract. Rather, the discount was received from the school itself.
In conclusion, once these conditions are met, it is permissible to deal in this form of tuition payment. And Allah the Almighty knows best.