Sharia loans to be made available for Muslims applying to university

Sharia student loans will be set up for the first time as part of a drive to boost the number of young Muslims applying to university. The Government has confirmed that a new “halal” finance model will be introduced which does not conflict with the rules of Islam. Muslims are forbidden from taking out loans on which they would be charged interest, and campaigners say this is putting some youngsters off going to university. A government White Paper said: “We will introduce an alternative finance system to support the participation of students who, for religious reasons, might feel unable to take on interest-bearing loans. “We have heard that that some students will not access higher education in these circumstances, some will access higher education and use loans but will be troubled by their situation, and others will restrict their choice of course or institution to try to minimise the sums involved. “To ensure participation and choice are open to all, we plan to legislate for the creation of an alternative model of student finance.” The Takaful model is based on the idea of a community fund, which students would be able to draw from to pay their fees. They would then pay back the sum into the fund as a “charitable contribution” for use by other students in future. Although no “interest” would be charged per se, the government said that repayments would be structured so that the total paid back would be the same as that paid by a student with a regular loan. The Takaful model would be available for everyone, not just Muslim students. The Muslim Council of Britain welcomed the development. Dr Shuja Shafi said: “The government is to be commended for making this positive step, it would allow Muslims to fulfil their religious obligation to study and to avoid interest. This will undoubtedly pave the way for more students to participate in higher education, and there is no reason why non-Muslims too should not be able to benefit from this as well.” The Muslim Council also announced that they are trying to work with other countries to implement a similar process. They are targeting Scandinavian countries first and foremost – Sweden and Finland being a priority. They hope by creating Muslim-friendly Swedish personal loans, they will further develop the cause. Some loan companies in Sweden even offer loans without the need for UC which is their credit check. Those who are interested in looking for those types of loans should look out for – lån utan UC – when looking into a Swedish personal loan.

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