Last week, the British government's Department for Business, Innovation and Skills
announced a proposal to make available Shariah-compliant student loans to Muslim students. (
Full text of
Consultation On a Shariah-Compliant Alternative Finance Product). The Executive Summary explains the proposal in part as follows:
In September 2012 changes to higher education funding mean that students are able take out student loans for tuition of up to £9000 for each year of study. These post-2012 loans carry a different rate of interest, above inflation, to student loans issued before September 2012.
Some students, whose religious beliefs may forbid the taking out of a loan that bears interest, may be unable to take advantage of student loans because of this change. This could make it more difficult for them to benefit from higher education.
The Government have been exploring the possibility of making an alternative student finance product available. This finance product would be Sharia-compliant and overseen by a Sharia advisory committee. Any such alternative finance product would not result in a student being in any way disadvantaged or advantaged over a student who took out a traditional student loan. Both the size of the finance and the repayment amounts would be equivalent between the two systems. The model of the proposed product could be applied for in the same way as a traditional loan: through the Student Loans Company (SLC).
The Telegraph reports on the proposal.
[Thanks to Alliance Alert for the lead.]
