The Hidden Cost of Haram Student Debt
In October 2021, a consortium of Muslim organisations - including IFG - commissioned a report which found that 4 out of 5 Muslims ‘who take the existing student loan’ ‘feel they have compromised their faith’.
The data that Muslim Census presented – backed by 36,000 responses, speaks to a much wider issue: do Muslims feel supported in their pursuit of further education? And what are the parameters to higher education that the lack of a sharia compliant student loan system poses?
IFG spoke to a number of Muslim graduates who have used the student finance loan to understand the impact of this on students while studying, and on graduates who worry about whether they have compromised their faith or not.
Well, what is wrong with the existing student finance system?
There are a significant number of Muslims who do not go to university at all because they believe student finance to be impermissible. Many of the graduates we interviewed commented that they started to doubt the sharia compliance of Student Finance in the midst of their studies.
But what does Islam actually say about student finance? Amongst scholars, there is a difference of opinion about whether student finance is haram or halal.
The current debate roots the permissibility of student finance in whether it is closer to ‘a tax’ or an interest based loan.
Those who consider student finance to be permissible consider it to be closer to a tax because it is required to be repaid in monthly installments when graduates earn above the threshold amount set by Student Finance England (which changes every April). These scholars also argue that the repayment of the debt is not enforceable in the same way other debts are and as such it is technically not a loan in the sharia.
However, Mufti Zubair, amongst others, states that the Student Finance loan agreement falls ‘foul of Islamic law’ because the structure of the loan - i.e. requiring repayments - is a feature of a classic interest based loan.
The IFG view is that student loans are not permissible. “High earners will pay back their student loan in full and they will pay it back with interest,” said Ibrahim Khan. “Sure, there are arguments around how the the student loan agreement is not like a classic bank debt, but the fact remains that most people will pay back much more than they borrowed.”
He was also not convinced by the enforceability of debt argument. “The government forces all employers to make sure they deduct student finance payments from their employees’ wages automatically. If we don’t do that, we’ll get prosecuted. There is a clear system in place to recover the student debt.”
A pragmatic solution
Clearly there are valid fiqhi differences on this topic.Regardless of the differences, the simple point remains that a significant number of Muslims are prevented from going to university at all because they believe the existing student finance provision to be haram.
Therefore, a solution that is likely to get the vast majority of people comfortable with going to university is a student loan alternative that is structured in a sharia-compliant way.
How has this impacted current students and graduates?
For many, University is a natural and necessary stepping point. From 18-21, you are to go off and study something interesting. For many of the Muslims we spoke to, however, the lack of a sharia compliant student finance system creates additional pressure on making the ‘right’ choice of both university and course.
Is their degree ‘worth’ studying, meaning, is it worth potentially compromising their faith? Is it worth the debt? Were they complacent in researching this issue?
University is considered a risky and huge investment into their future - they do not have the privilege that some of their peers have had to consider the choice of what to study at university as a purely scholarly or academic pursuit. Or quite simply, as a choice to study what they enjoy and excel at.
An internal ethical dilemma
IFG spoke to Supti who explains that while applying to university she wasn’t too familiar with this conversation of whether student finance is sharia compliant or not.
She worries this was perhaps complacency on her part. It was only when she arrived at university that she noticed some students had a scholarship or had taken a year out to save up for university.
As a graduate, Supti speaks of how she has reconciled this ‘internal ethical dilemma’ and hesitancy about whether Student Finance was permissible by staying away from the corporate world. As a teacher she feels her degree has been ‘justified’ as it continues to directly contribute to society.
A degree as a stepping stone
Sarah*, a psychology graduate, explains that while at the time she was studying she was of the opinion that student finance is permissible, it added pressure and remained a worry. She thought of her degree as a ‘stepping stone’, it could not be limited to her ‘interests’.
As a graduate she spoke of feeling pressured to pursue a career in psychology, otherwise, ‘what was the point?’ Indeed, a dominant discourse around higher education and access to university has been about enjoying what you study and increasing access to ‘non-traditional’ degrees. However, this neglects the barriers that Muslim students have faced – they have had to make more calculated decisions (albeit at 18) and considered their studying to be transactional in some sense.
A problem crying out to be fixed
Relying on Student Finance has had a clear and lasting impact on Muslim students.
There is the debt aspect, but also an enduring worry that remains with graduates: was this degree ‘worth’ it? Though there have been significant shifts in widening participation trends and record numbers of Muslims in higher education, it remains inaccessible to Muslims on so many fronts.
*Some of the names have been changed to protect interviewees privacy
Images from Unsplash