Muslim students in UK face loan dilemma

New student loan scheme proposed would have interest added for repayment, banned under Islamic law.

LONDON // Thousands of young Muslims in Britain could be denied the chance of a university education because of a new government scheme to charge interest on loans to undergraduates, an Islamic student body has warned.

The Federation of Student Islamic Societies (Fosis) has embarked on urgent talks with the Department of Business, Innovation and Skills because the scheme, to come into effect in a year's time, amounts to usury or "riba", which is banned under Islamic law.

Until now, student loans taken out by tens of thousands each year to cover tuition fees and living expenses have attracted no interest, though they have been adjusted to cover inflation. Graduates begin repaying them when they start earning more than £21,000 (Dh127,000) a year.

Under the scheme coming into force in the 2012-13 academic year - when tuition fees themselves are virtually tripling to a maximum of £9,000 a year - graduates will have to repay the loans at an interest rate of up to three per cent plus inflation.

Fosis fears that the scheme will wreck the participation in higher education of many would-be Muslim undergraduates, 90,000 of who are currently studying at British higher education institutions.

A spokesman for the organisation said the new scheme amounted to "blatant usury" and Nabil Ahmed, the federation's president, described the plans as "alarming and unethical".

He added: "Many Muslim students are averse to interest due to teachings in the Islamic faith.

"We feel that the encouragement of Muslim participation in higher education is crucial and it is key that socio-economic barriers are removed and not erected, to allow Muslims to become active members of our society."

The National Union of Students (NUS), which represents more than a million young people in higher education, is assisting Fosis in its negotiations with the government.

One scheme under consideration is the creation of a loan system similar to that of Islamic mortgages where the bank buys a property and the borrower pays a rent. Under the compromise currently being discussed, a university education would be "rented" to Muslim students.

However, such a system is unlikely to be in effect for the 2012-13 academic year. Usman Ali, the NUS vice-president involved in discussions with the government, told The Independent newspaper this week: "It is important that we ensure complete equity for Islamic students but, disappointingly, the final framework looks unlikely to be in place until the 2013-14 academic year."

The Muslim Council of Britain, an umbrella organisation representing more than 400 organisations, has urged students considering university entry next year to try and organise interest-free loans from family members or friends.

Some Muslim scholars have also suggested that students could take out loans under the rule of necessity, as long as they were paid back as soon as possible and were for the minimum amount needed.

There is unease among the ranks of the ruling Conservative Party about making special arrangements to accommodate Muslim students' religious beliefs.

Nik Darlington, a political adviser in parliament and member of the influential Tory Reform Group, wrote on the organisation's Egremont website yesterday: "We do not operate under Islamic law. The student finance system has to be devised according to British laws, not those of a religion observed by three per cent of the UK population.

"If Muslim students do not want to pay interest on their student loans because doing so would contravene their faith, then I have some sympathy for them.

"However, we cannot have a situation in which some graduates end up paying less because they happen to observe a different religion to their peers."

 

dsapsted@thenational.ae

Published: August 25, 2011 04:00 AM

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