The British government is to offer Sharia-compliant loans to Muslim students in an attempt to get more of them to go to university.
The new system will allow students to pay a donation into a pool system instead of paying high interest, and has been produced by the Department for Business, Innovation and Skills (BIS).
The Daily Mail reports that there had been concerns that Muslim students had been put off by the high loans, which are paid back above the rate of inflation – something which violates their beliefs.
The BIS has confirmed that those who take out loans under the new scheme will still pay back the same amount as other students, except they will make a charitable donation rather than pay interest.
With university fees being a relatively recent innovation in Britain, most families have yet to catch on to the practice of starting college funds for their children. Instead, the vast majority of Britain’s students borrow money from the Student Loans Company, taking out up to £15,000 to covers fees and maintenance costs.
The loans carry an interest rate in line with the Retail Price Index, currently at 2.5 percent, plus three percent, with repayments based on the income of the student once they graduate and find employment.
Around 20,000 people responded to the BIS’s consultation document on the issue of Sharia loans. Of 1,054 Muslim students who responded, 337 said they had religious objections to paying interest, with 144 saying they would not go to university as a result.
The new systems operates under the ‘Takaful’ system, in which people pay money into a pool that is used to guarantee others against loss. This is regarded as a charitable donation in the Sharia system.
However, it remains to be seen how popular the new scheme will be as various Muslims disagree on interpretations of Sharia law. The National Association of Student Money Advisers said: “There is a variety of interpretations amongst Muslim groups as to what would be acceptable under Sharia requirements.”
The BIS also said that the creation of the loans scheme would not lead to a wider roll-out of Sharia-compliant institutions in the UK, saying: “Sharia has no jurisdiction in England and Wales and the Government has no intention to change this position.”