Student funding and Sharia law
Some Muslim students and members of other faiths may be deterred from taking out the UK government's student loans, due to the interest payment system.
The Department for Education continues to meet with the NUS and the Federation of Student Islamic Societies to discuss this issue. FOSIS is a national umbrella organisation representing Muslim students and Islamic societies at UK universities.
Interest-free overdraft facility
Most UK banks offer student accounts for undergraduates who have a maintenance loan. These accounts are interest free, up to a specified limit, depending on your credit history. The bank may want to see evidence of your maintenance loan before you can opening an account.
You may want to use online comparison tools to identify banks that offer the most generous interest-free overdraft facilities.
The UK government offers eligible undergraduate students a tuition fee loan and maintenance loan for each year of study. Since 2012, interest on these loans has been charged at the rate of inflation plus 3 percent while you are studying. The interest rate then varies after you have finished your studies. It will be between the rate of inflation and inflation plus 3 percent, according to earnings.
The UK government offers loans to eligible taught and research postgraduate students. These loans are a contribution towards tuition fees and/or living costs. Read more about postgraduate master's loans and PhD loans.
Possible consequences of not taking out loans for studies
It is important to understand that if you decide for faith reasons not to take a loan for your studies, this may have an effect on your eligibility for other sources of funding. You would need to find alternative funding such as family, friends or savings to cover the cost of your education.
Some factors you may wish to consider are:
- Financial Assistance Fund
- The University of Bristol has a Financial Assistance Fund to help students facing financial hardship. If you are a home undergraduate student who is eligible for UK government Student Finance, you can only apply to the Financial Assistance Fund if you have taken your full maintenance loan entitlement.
- Similarly, if you are a home postgraduate student, you must have made provision to pay your tuition fees and basic living costs and would be expected to have taken out the full loan you are eligible to receive from Student Finance before applying to the fund.
- University of Bristol Bursary/Access to Bristol Bursary/Bristol Scholars Bursary
- To determine your eligibility for the main University bursaries, we will need confirmation of your household income, which is assessed by your regional government, eg Student Finance England. This means that you and your family must consent to be means-tested for the government loans and grants and provide details of your household income.
- You may not ultimately wish to take out any loans that you are eligible to receive. However, unless you agree to be means-tested by your regional domiciled government, we cannot determine your household income. Consequently, we will not be able to determine if you are eligible for any of the main non-repayable University of Bristol student bursaries.
- Students eligible for a Bristol Scholars Bursary or Access to Bristol Bursary will be entitled to a non-repayable living cost bursary which is payable in each academic year provided that they remain eligible and are within the qualifying household income threshold.
- Other University bursaries and scholarships
- Several other University bursaries and scholarships, especially those designed to support students from a widening participation background, will use household income information to help determine who is eligible for the scholarship/bursary. Without information on your household income, your chances of being awarded one of these bursaries or scholarships may be reduced.
- Welfare benefits
- If you are entitled to claim welfare benefits as a student, the office assessing your benefit claim will assume you have taken your UK government student finance loan entitlement and will reduce your benefit entitlement accordingly.
- Other UK government student finance
- Some elements of government Student Finance are not repayable and depend on your personal circumstances. These include supplementary grants for dependants or disability-related course costs. If you are assessed for support by Student Finance Wales you may qualify for a non-repayable maintenance grant. You might wish to discuss possible options with the Student Funding Office.
The UK government has been exploring the possibility of an alternative finance system available alongside traditional student loans that will avoid the payment of interest but results in identical repayments to the conventional system. This funding would be Sharia (Shariah, Shari’ ah) compliant and overseen by a Sharia advisory committee.
A public consultation ended in 2014 which has resulted in an agreement to offer an alternative finance product. This 'Takaful' product has received preliminary approval from Al Rayan Bank's Sharia supervisory committee. See chapter 4, paragraphs 27-36 of 2015 government green paper 'Fulfilling our potential Teaching Excellence, Social Mobility and Student Choice' [PDF 2,197KB].
Some financial institutions have Sharia-compliant financial services. They guarantee that money held in these accounts is not invested in industries such as gambling, alcohol or weapons manufacture.
Trusts and charities
If you are a Muslim student and have secured your main source of funding for your studies, you may be eligible for some additional financial help from the National Zakat Foundation. Find out if you are eligible and what you might receive on the National Zakat Foundation website.