Sharia-compliant student loans considered by Govt

Students could in future apply for a Sharia-compliant university loan, under plans being considered by the Government.

Under Sharia law, all forms of interest are banned. However, the Government scheme would allow Muslim students to repay the money they owe into a common account.

Other Islamic students would then use the mutual pool to fund their studies.

Concern

The current university finance system allows students to borrow up to £9,000 a year for tuition fees.

They are required to pay back the loan with an above inflation interest rate.

The Daily Telegraph’s Education Editor suggested that the Sharia student loan plan “will raise concerns over a two-tier system” in which some students pay less than others.

Put off

Omar Ali, president of a Muslim students’ group, said it welcomed the proposal, which is currently being consulted on.

David Willetts, the Universities minister, said the Government was aiming to make the “path to university easier for everyone”.

“We are aware that some Muslims and young people of other faiths might be put off taking out a conventional student loan.

“To address this we have developed a potential model alternative finance product which would be Sharia-compliant and could be offered alongside traditional student loans”, he added.

Approval

The scheme – to be overseen by a Sharia advisory committee – is based on one used in Islamic finance that allows groups of people to “cooperate to provide mutual finance assistance”, the Government says.

It says it has “worked closely with experts in Islamic finance to develop this alternative student finance product”.

The Government adds that the plans have “received preliminary approval from the Islamic Bank of Britain’s Sharia supervisory committee”.

Ali said: “We know of many students who finished college but decided not to go to university because of the way the new system was set up. We welcome this proposal.”

‘Promoting’

Earlier this month the Law Society – which gives advice for solicitors in England and Wales – was accused of “promoting” Sharia law.

The claim referred to advice from the Society on Sharia-based wills. It said that under the Islamic system male heirs “in most cases receive double the amount inherited by a female heir of the same class”.

Campaigner Peter Tatchell said the Law Society “should withdraw its guidelines assisting or promoting Sharia Law in the UK”.

The Sunday Telegraph called the guidance a “worrying development”. It said in an editorial: “Promoting sharia is part of the radicals’ anti-integration agenda.”

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