Sharia Loans for the First time in British Universities
Sharia loans are to be offered by the Government for first time as a new White Paper attempts to increase diversity in British universities.
Muslims are forbidden from taking out loans on which they would be charged interest, but under the new arrangements they would instead pay โcharitable contributionsโ which would allow more youngsters to go to university.
Ministers are tackling the issue by creating a โTakafulโ model, by which students would make payments to a communal pot that would then benefit future students wanting to go to university.
The White Paper said: โWe will introduce an alternative finance system to support the participation of students who, for religious reasons, might feel unable to take on interest-bearing loans.
โWe have heard that some students will not access higher education in these circumstances, some will access higher education and use loans but will be troubled by their situation, and others will restrict their choice of course or institution to try to minimise the sums involved.
โTo ensure participation and choice are open to all, we plan to legislate for the creation of an alternative model of student finance.โ
Dr Samir Alamadย a member of the Sharia Supervisory Committee and the expert who came up with the idea of the โTakafulโ funds, said: โIn the Islamic faith there is a strong prohibition against dealing with any sort of interest in any sort of financial transactions.โ
Under the usual arrangements, students repay their loans to the Government when they start earning ยฃ21,000 and pay an interest of 3 per cent or more depending on their earnings.
However, under the alternative finance arrangements, Muslim students, or those from other faiths, would pay an โagency feeโ of 3 per cent or more depending on earnings and the money they pay into the fund constitutes a โcharitable contributionโ.
Responding to concerns by some that this might just be a change in names, Dr Alamad said: โThis is different. People pay back to the fund so future students can benefit from it rather than paying back to the Treasury. Itโs about giving back to the community.โ
Universities to be forced to lower their fees
Separately, universities might be forced to lower their fees to existing students if their teaching was not up to scratch for a year, according to proposals in the White Paper.
It said: โWhere a providerโs Teaching Excellence Framework (TEF) level drops for the academic year to which the new level applies, they will have to lower the fees they are charging existing students.โ
The new system will be โhistoryblindโ meaning universities wonโt be able to โbankโ on positive performance from previous years.
However, experts warned this risked โcommoditisingโ the sector with fees going up and down.
News Reported from Telegraph.
Written by
Ustadha Fahmina holds a Sanad in Alimiyyah (6-year Dars-e-Nizami) from two recognized Islamic institutes and a Master's degree in Arabic from Indira Gandhi National University. She teaches Qur'an, Tafsir, Hadith, and Fiqh following the Hanafi school within Ahl al-Sunnah wal Jama'ah. She founded Islam Hashtag in 2015 to bring authentic Islamic learning to Muslim families online. She also holds a degree in Optometry and is the founder of Optometryskills.com.
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