Alternative loans model to be offered to Muslim students
“The Government must act quickly” – NUS President
David Cameron has stated that the Government will introduce Sharia compliant student loans.
Many Muslim students currently feel unable to take out student loans due to religious objections over interest. Under the new £9000 fees, a ‘real’ rate of interest is charged on student loans.
Many Muslim students and organisations representing them feel this rate makes student loans inaccessible to them. Members of other Abrahamic faiths could also object, though Muslim students are the most affected.
Practical difference for students in signing different paperwork
The NUS has campaigned for Sharia compliant loans since the rise in fees in 2010, alongside FOSIS, Al-Qalam and 1st Ethical, organisations which offer various kinds of social and legal support for Muslims. They have developed a model which would be offered alongside the typical student loan scheme, a through a ‘commodity murabaha structure’ which leave students repaying the same amount overall, but avoids the use of interest.
Not all Muslim organisations believe it is ideal from a Sharia perspective, but that it is tolerable as long as it adheres to the guidelines of Accounting and Auditing Organization for Islamic Financial Institutions.
NUS President Toni Pearce has said:
“It’s fantastic that the prime minister has accepted this very real need for sharia compliant loans. It is simply not acceptable to expect people to drop their religious beliefs in order to access education.
“How this loan is modelled will be particularly important and it is crucial that this model is applied to all loans, for both further and higher education. The current situation is simply unacceptable, and Government must act quickly to ensure it is finally addressed.”
David Cameron noted the issue as a matter of urgency, so that no more students are deterred from study.