Is taking student loans permissible I heard there was a bit of leeway given. Kindly explain?

Answer:

الجواب حامدًا ومصليًا

Conventional student loans are haram because they involve riba (interest), which is explicitly prohibited in Islam. These loans require the borrower to repay the principal amount along with an extra amount (interest). This extra is not in exchange for any additional value or benefit but is merely charged for the passage of time, which constitutes riba. Allah says:

“Allah has permitted trade and has forbidden riba.” (Sūrah al-Baqarah, 2:275)

The Prophet ﷺ also said:

“Allah has cursed the one who consumes riba, the one who gives it, the one who records it, and the two who witness it.” (Ṣaḥīḥ Muslim, 1598)

The Ḥanafī scholar, al-Sarakhsī, explains in al-Mabsūṭ:

“كل قرض جر منفعة فهو ربا”

(Every loan that brings a benefit [to the lender] is riba.)

However, Sharīʿah-compliant alternatives are available, including:

1. Scholarships and Grants: These are fully permissible and an excellent means to fund education.

2. Qarḍ Ḥasan (Interest-Free Loans): Organizations like Access Community Capital Educate offer such loans to students in need.

3. Income Share Agreements (ISAs): These allow students to repay a percentage of their future income instead of a fixed amount with interest.

Muslims are encouraged to seek education through ḥalāl means and avoid transactions involving riba.

References:

1. Al-Kāsānī, Badāʾiʿ al-Ṣanāʾiʿ fī Tartīb al-Sharāʾiʿ, Kitāb al-Buyūʿ.

2. Al-Sarakhsī, Al-Mabsūṭ, Kitāb al-Ribā.

3. Ibn Nujaym, Al-Baḥr al-Rāʾiq, Kitāb al-Buyūʿ.

4. Al-Marghīnānī, Al-Hidāyah, Kitāb al-Kasb.

And Allah knows best.

Issued by:

Mawlānā Hamoon Masudi

Approved by:

Muftī Manzoor Ahmad