[ivandiadser]

Paying interest on student loans. I'm surprised it has taken this long for it to become an 'issue'...........
http://www.thenational.ae/news/world...e-loan-dilemma

[lLianneForbess]

Well in the old student loan system, the interest rate was set at inflation rate. This gave it a real interest rate of 0% leaving aside the actual fact one has to use paper currency not backed by gold (fiat).
I wonder what the scholars have to say? i say this because though it seems 'obviously' like riba. it may not be so simple. The way the loans are structured they can effectively be regarded as a graduate tax of 9% on income above £21k. They have been specifically created so most people will never actually be able to pay them all off by the time they get to 60 which is when the loans get written off. So one may possibly regard it as 3 years 'free' university education in return for a 9% tax on income above 21k.

[sbrthrds]

Salaam,

AMJA discussed this issue at a conference in Canada back in '09. Here is their conclusion:

Draft Decision
The Assembly of Muslim Jurists of America, in its 6th annual conference held in Montreal, Canada, Oct. 2009, and after studying the papers submitted by Amja's members and
discussing them in detail, has reached the following decisions on Student Loans:
1- University education is one of the most important needs of the time for Muslims living in
the United States, and it could be considered one of the necessities on the basis that
necessity refers to something the lack of which entails harm on the Muslim and there is
no other alternative to it.40
2- Muslim students must expend their strenuous efforts in finding lawful sources to fund
their studies, such as grants, financial aid, scholarships, and labor programs of the
university.
3- If the student can decrease his study load and work part time to financially support
oneself, or take a subsidized loan, he shall do so.
4- If the student cannot do that and needs a subsidized loan, he will be allowed to take the
loan on condition that he takes only the amount needed and tries his best to settle his
debts in the repayment period to avoid paying the interests.
5- When the subsidized loan (which is interest-free) is not enough, and there is no other
way except borrowing in interest, it will be permissible for him to borrow in interest only
an amount that obviates his necessity. That is because necessity must be answered
proportionately. Borrowing should take place after he has already enrolled in his study,
since things which were not tolerable at the beginning can be tolerated later.

The Assembly urges all Muslims to cooperate together in order to fulfill their needs through
lawful ways and try their best to guarantee education of their children and provide funding
resources which agree with the ruling of the purified Sharee‘ah.
Allah is the Cherisher of success and the Guide to the straight path.


The full article can be found here:

http://www.amjaonline.com/conference...ainAlqudah.pdf

and if that link isn't working for some reason it can also be found here:

http://www.amjaonline.com/en_d_details.php?id=339

[ivandiadser]

bump