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Loan Dilemma Imminent For Muslims Studying In UK

by Jim ONeil on August 26, 2011

in student finance

Thousands of Muslims attend university in Britain every year in order to get a high-quality education. This may no longer be the case in upcoming years, due to a new government program that charges interest on undergraduate student loans. The program equates to usury, which Islamic law bans.

To date, student loans have been adjusted for inflation but have not included interest. Once the graduate begins earning over £21,000 annually, loan repayment begins. A new program that goes into effect during the 2012-13 school year requires graduates to repay loans with an interest rate of three percent maximum plus inflation.

There are currently 90,000 Muslims studying at higher education institutions in Britain. The Federation of Student Islamic Societies(Fosis) has begun discussions with the Department of Business, Innovation and Skills regarding the impact the new law will have on them. Federation President Nabil Ahmed referred to the new program as “alarming and unethical.” He believes that socio-economic barriers should be removed, not added, to encourage Muslims to become active members of British society.

Fosis has gained the support of the National Union of Students in its governmental negotiations. A program that mirrors Islamic mortgages is one system under consideration. Muslim students would pay the equivalent of rent to receive their university education. However, it seems any new system will not be implemented until the 2013-14 academic year. Students entering university next year are being encouraged to arrange interest-free loans from friends or family.

Some have suggested that students take loans under the necessity rule, provided that they were for the minimum amount required and repaid as soon as possible. Meanwhile, the British Conservative Party is hesitant to make special arrangements amounting to religious belief accommodation. Tory Reform Group member and parliament political adviser Nik Darlington said paying less for schooling due to a chosen religion should not be permitted.

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