Student loans/finance

Question

السلام عليكم و رحمةاللهً و بركاته

Dear respected Ulema. Since your last video and verdict on students loans being impermissible in 2013, many mainstream Ulema have said it is not haram – Including Dr. Haitham haddad and Dr.Sajid Umar.

Thus, many youngsters in the UK have started taking the loans as they have flipped the coin on this debate and verdict.

Their interpretation conclude UK student loans are as said – conditions for a loan are not fulfilled, then it is not a loan; and if the conditions for riba are not fulfilled, then it is not interest. They state it’s more like mudharabah than a loan.

Furthermore…quote

“The loan is not actually paid to the student, so you never get hold of the money in the first place, nor do you have the choice to do with it as you wish.
The loan is written off after 25 or 30 years.
The loan is cancelled if you become permanently disabled.
The loan is cancelled if you pass away.
You are not required to pay anything if you do not earn above £21,000, even if you are very rich”

So how does fiqh hanafi deal with this and are the original conditions and verdict as mentioned in 2013 fatwa still applicable?

جزاك الله خير

The verdict is on their website islam21c

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Answer

Our opinion remains the same as issued previously and that is that student loans are not permissible. Majority of scholars have adopted this position and those that have argued otherwise are few.

The argument that student finance falls under a mudarabah agreement is problematic. This has been discussed in detail by Mufti Faraz Adam in the following article:

Are Student Loans a Mudharabah (investment contract)?

As for the conditions placed by the loan provider such as not being required to pay the loan back under certain circumstances, these do not stop this arrangement from being a loan contract. If a person was to give a loan for two years and said to the borrower that if they cannot pay it back within two years then it will be forgiven, this condition will not prevent the money given from being a loan. The lender and borrower can mutually agree to such conditions without it effecting the loan contract.

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel

Source:

https://fatwacentre.org/business-trade/student-loans-finance/