# Is interest-based educational loan allowed?

Students from economically backward communities who opt for higher studies generally depend on educational loans, which are offered with interest, either by banks, developmental organisations, or by government, if they don't get a scholarship high enough to meet their needs.

I support the idea of doing a small job first, earn the required amount and then going further in studies. But, this would take more than a single year to earn even a single year's fee.

Not all students are bold enough to ask for zakaat, and even if they are bold enough, they may not get the suitable sources.

In such scenarios where a student has no financial sources but the interest-based education loan, should a student abandon his studies?

• economically backward communities? That sounds like a bit of a troll... – Flimzy Jul 7 '12 at 18:58
• There some muslim agencies which provides interest free educational loan to students – Tachyons Jul 8 '12 at 0:21
• I was taught that a person taking a riba loan is the victim of riba, not the 'consumer' of riba. In a similar manner to how someone who gets robbed is not encouraging robbery. And low interest loans tends to go near the inflation line, meaning that the money you pay off has close to the same value as the money you borrow. Will find citation for this later. – Muz Aug 10 '12 at 19:15
• @Tachyons , brother do you know which country they operate in and the names of such agencies? – Aboudi Sep 8 '14 at 18:07

Dealing with riba (interest) is a major sin in Islam. There is no ifs and buts. Be it educational loan, house loan or even marriage loan. In Qur'an and Sunnah, you find stern warning against riba.

Allah says in Qur'an:

Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein. [Surat Al-Baqarah 2:275]

and he says:

O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged. [Surat Al-Baqarah 2:278-279]

The Prophet (peace and blessings of Allaah be upon him) said:

“A dirham which a man consumes as riba knowingly is worse before Allaah than thirty-six acts of zina.” Narrated by Ahmad and al-Tabaraani; classed as saheeh by al-Albaani in Saheeh al-Jaami’, no. 3375.

And he said:

“There are seventy-two types of riba, the least of which is like a man committing incest with his mother.Narrated by al-Tabaraani in al-Awsat; classed as saheeh by al-Albaani in Saheeh al-Jaami’, no. 3537.

It was proven from the hadeeth of Jabir (may Allaah be pleased with him) that the Messenger of Allaah (peace and blessings of Allaah be upon him) cursed the one who consumes riba, the one who pays it, the one who writes it down and the two who witness it, and he said, “They are all the same.”

The scholars are unanimously agreed that every loan involving interest or any kind of benefit is haraam.

Source: The Ruling on bank interest

Ruling On Interest Based Student Loans - Shaykh Saalim al Taweel

• Brother i understand, what other option do i have to complete my studies and earn a decent job a degree in the UK will cost £40000 excluding living costs and a job without a degree will earn £9000 with no stability thats around five years of pure earnings just to afford a degree but how can you have pure earnings if nothing remains of the £9000 each year, eventually you cant get a degree, and eventually one will starve and cant build a family on £9000 a year, what shall a person do? islamic banks or normal banks don't give such huge loans to even consider interest free? – Aboudi Sep 8 '14 at 18:01
• please give an explanation, wallahi im confused!!! – Aboudi Sep 8 '14 at 18:03
• @Aboudi I hope you understand this not a site for giving personal advice. I have given the Islamic perspective. – Abdullah Sep 8 '14 at 19:24
• my apologies if you understood this as personal advice, however it is not, i am still concerned from religious prospective, i have given a scenario to find out whether it is allowed in such a case, Allah has commanded us to seek knowledge, could this interest be haram from a business prospective as my case is life essential? i am not benefiting from the interest i have to repay it but i am benefiting from the loan!! – Aboudi Sep 8 '14 at 20:08
• I know in Islam sometimes in some cases there are exception could this be one lets say paying a Sadaka to make up for this?? – Aboudi Sep 8 '14 at 20:11

Salam O Alikum,

Perhaps too late to answer this question, but I ll add this just in case someone else might benefit from it.

I know of some brother who actually found a way around it.

When you take education loan (essentially government based) then the interest starts building from day one. And if you are doing a 3 year course then by the time you finish your course the interest would ve become a lot.

So if the loan for a BSc 3 year course is 6000£ per year - for three years that would be 6000+6000+6000 = 18000£ but the interest will make that figure to around 27000£ etc so you would have to pay extra 9/10 K as interest.

So the work around this brother did is he got a small job in McDonalds etc (as he was allowed 20 hrs work etc) and started paying back the loan from day one.

So essentially he will earn 500/600£ per month and that he ll pay that towards the payback of the loan, and since he is keeping up with the pace which is equal or higher to the pace of interest - so he is able to return just the amount and avoid interest.

And his salary per year (6000£) is just around the same 6000£ mark per year for Loan so he is essentially paying back the same amount. That was the work around he got. Paying back from day one - rather than waiting for Interest to start.

One has to try and do his / her level best to avoid interest as it's a direct was between the person and God (Allah Subhan A Ta'la) and His Messenger according to the Quran. So one has to use his intellect to know what they are getting into before they get into. Just do your maths first and plan accordingly.

• This is not a solution. I for one couldn't work part time simply because of my course load. I actually tried working and found that my grades went down the drain. There is just no way around it. – user921 Nov 28 '14 at 19:31
• This post provides an advice and not an answer. – Bleeding Fingers Nov 29 '14 at 9:54

No, and there's no exception!

Explanation:

1. As Abdullah mentioned in his answer riba (interest/usury) is a major sin and in fact it's one of the 7 distractive sins along with Shirk (associating partner in worship to Allah), Magic, Killing a person, Unjustly Eating the wealth of an orphan, Fleeing from the battlefield, and Sexually slandering a chaste, believing woman - Video Source (around 8:00).

2. There're some exceptions when there's an immediate danger to one's life like pork exception (Quran) or cursing regarding the religion (if not doing so causes one to be killed) and without really meaning that in the heart (Hadith). HOWEVER! There're some sins where there's no exception, for example, one CANNOT kill another person even under pressure of being killed himself/herself (or any other circumstances).

So, I would assume that a sin that would cause:

• Allah and His Messenger (SAWS) declaring WAR again that person

• AND that person being beaten until insanity - non-stop the entire Day of Judgement which is 50 000 years long (that's 50 MILLENNIA)

• AND a sin is worse than 36 acts of adultery

• AND the least of 72 types of that sin is as if committing incest with his own mother (in some wordings in front of Ka'aba)

• AND the Messenger of Allah (SAWS) cursing that person

So, how one could ever hope for the blessing from Allah after all of this?

In my humble opinion there just can't be any exception for this and one should not even look for trying to put the burden on some else's neck saying "such and such said that it's halal."

I am not even considering the situations where a person would get disabled or even dies without having anyone to pay of his/her debt - this one would be even painful.

So, as some scholars say: "It is better to starve to death than dealing with riba!"

And Allah Knows Best.

These videos helped a lot:
The Dangers of Riba - Karim AbuZaid
Islam protects you from "Loan Sharks" - TheDeenShow

P.S. I lived and studied in the USA for 6 years: 2 years English only, 4 years Computer Science and the highest tuition I had was about $7k-$8k a year (without room-n-board) so you can always find a cheaper solution (or save money and then enroll to school).
And I didn't have anyone to write me a check for my tuition so I had to deal with it myself.

PLEASE, forgive me if anything I wrote comes out harsh or insulting, I wrote this just as a reminder to myself first and then to anyone who comes across, in order to keep us all away from the punishment of Allah.

I ask Allah to make this easy on every one of us.

I see comments like 'a brother has found a way to go around the issue of interest on student loan'. Please DO NOT play games with Allah. HE is all knowing, compassionate and merciful. As long as your intentions are sincere, Allah knows you have to educate yourself and earn a living and in this day and age paying and receiving interest is a way of life. Allah does not want to punish you for an education loan or any loan as long as the parties are sincere and the purpose of loan is a necessity. Remember businesses, home ownership, education etc are necessary to sometimes survive. AND Allah wants to help honest followers. So, get yourself educated and you will be able to do more for Islam and humanity. Allah wants you to suceed and not fail for your sake, for the sake of your family and for Islam.

should be a comment, but apparently I'm a nobody without any rep LOL here in canada our student loans are like ~5% interest from a set time after you graduate or from when you find a job(after graduation)... so a loophole is to take a small amount and pay it off from money from intership.so you are taking a loan but never pay any interest/fees on it.

Is it not true that even Hazrath Umar (RA) is on record saying that the Ayah about Riba was the last to be revealed and he could not get an explanation of Riba and its different types because the prophet was sick and passed away soon after that. And Umar (RA) one of the most knowledgeable of all prphets' companions did not give any statements explaining Riba. The interpretations of the so-called Shaiks and Alims and different authors of the past (when no banks existed, and finance sector was primitive compared to 21st. century) are therefore "mere interpretations". Even the Quran does not have a clear definition of Riba. We all need to do more research on this topic before induldging in it or advising for or against it. Research the topic thoroughly and do what your conscience permits because Allah knows your intentions.

We seem to be stuck 1400 years ago when lenders took advantage of the poor borrower by charging usurus interest. In the 21th century, it is different. Lenders borrow from others and pay interest for the use of money. As long as there is reasonableness and fair dealings, it is not usury. The intent of parties are honorable. IF the lender charges 40%interest or something unreasonable he knows the borrower will fail since his intent are evil. Now that is sinful. So borrowing and lending in a fair and reasonable manner is ok and not sinful. Use of intellect and differentiating between right and wrong should guide you, and remember Allah is all knowing.

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