Darul Iftaa Mahmudiyyah

Are student loans in the United Kingdom permissible?

· 6 Shaʻban 1425 AH1 min readFatwa 12725English

Question

Are student loans in the United Kingdom permissible? The loan works around a concept called inflation. What this means is that, as the value of the amount received will depreciate in the following years, an additional amount would be returned, not as interest, but to make up for the loss of the initial value. Therefore, even though (for example) £1000 was received and £1200 was returned, the same amount of gold (or any other item) is purchasable with both amounts. The student loan is used in the UK as a means of helping the students; thus no profit is desired by those that give the money ? no profit is made. Can you please clarify whether student loans are interest or not because in reality there is no change in the value received and the value returned? Jazakumullahu Khair

Answer

The student loans as explained by you is interest and not permissible.

and Allah Ta'ala Knows Best

Mufti Ebrahim Desai

Answered by
Mufti Ebrahim Desai
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Source: Darul Iftaa Mahmudiyyah — https://askimam.org/public/question_detail/12725
Fatawa SA: https://fatawa.co.za/fatwa/askimam-12725

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