:salam2:
In the UK you can take a loan out from the local education authority that claim its 0% interest, it doesn't give a grace period for its loans, you start repaying student loans when you earn over £15,000 a year, then a small payment every month gets deducted. You pay the amount that was loaned to you. Also if you are unfit for work or you die then your loan gets cancelled.
I don't know, I personally don't see the problem with this interest-free loan and it has provided many students with higher education. Bearing in mind the Shariah does emphasise that giving a loan is an act of worship and here you are doing good to those that need it. And the prophet (PBUH) did say that whoever gives a loan to his Muslim brother then his own wealth will flourish.
Wa `alaykumussalaam wa rahmatullaah
The student loan from the LEA in UK, is problematic. The LEA takes inflation into consideration and charges a "tiny bit" more when you are paying back the loan. This sort of loan is haraam to take and comes under the category of ribaa. Ibn al-Mundhir said: "They are
unanimously agreed that if the lender stipulates that the borrower pay something extra or give him a gift, and gives the loan on the basis of receiving something extra, that is riba."
Below is a fatwa about inflation-based loans:
I know that taking interest is haraam,but I would like to know what does islaam say about taking interest based on inflation.For example,if you borrow 50 pounds and you want to return the 50 pounds in 5 years time,the value of the 50 pounds that you borrowed would be higher in 5 years time.Therefore you payback the equivalent amount to the 50 pounds that you borrowed.I ask this question because I want to know if it is allowed for me to take out a student loan which has interest based on inflation.
Praise be to Allaah.
Firstly:
If you borrow 50 pounds from a person or an institution for a period of five years, you have to pay back this amount in the same currency, even if its value goes down (because of inflation), so long as transactions in this currency are still valid.
We have already explained in Question no. 12541 that paying extra on a loan because of devaluation of the currency is haraam and is regarded as a kind of interest. This is the view of the majority of fuqaha’.
Secondly:
Whoever takes a loan in one currency and agrees to pay back in another, has fallen into riba, because what he has really done is to sell one kind of currency now in return for another currency to be paid later on. This is haraam and is one of the two kinds of riba which is called riba al-nasi’ah.
But the borrower may agree with the lender – at the time of repaying the loan – to hand over the money in a different currency. In the example referred to above, when five years have passed and you have to pay back 50 pounds, you can agree with the lender – on the day of paying back – to give him the equivalent in another currency, such as dollars, but that is subject to the condition that it be at the exchange rate that is current on the day you pay it back.
Thirdly:
With regard to taking a loan with interest based on inflation. We have already stated that paying interest on a loan to make up for inflation is haraam, and that it is a kind of riba. Based on this, it is not permissible for you to take this loan, because the Prophet (peace and blessings of Allaah be upon him) cursed the one who consumes riba, the one who pays it, the one who writes it down and the two who witness it. He said: “They are all the same.” Narrated by Muslim, 1598.
And Allaah knows best.
With regards to the initial question posted by sister Shahnaz:
Firstly: I don't see what is wrong with the analogy that sister Tabassum drew from the fatwaa in IslamQA about Credit Cards. Because going into such a contract may not be ribaa in itself, but it is "approving" of this ribaa. In such a contract there is a
possibility of falling into ribaa. Even though one cannot say that the contract is ribaa in itself, the fear of falling into is to be taken into consideration, thus the prohibition as mentioned by the Shaykh
Secondly, as brother Abu Sarah posted the fatwa of Ibn `Uthaymeen rahimahullaah, that one may go into such a contract if there is a
need (NECESSITY)- but the question here arises as to you taking this loan,
for doing your Masters, is actually a "necessity". And I have come across many people who take it a bit too easy on this whole "there is a need" issue<< Don't take me wrong sister, but I am just saying this in a general sense, nothing towards you- Inshaa'Allaah your intentions are clean and is towards seeking the pleasure of Allaahu Subhaanah... may Allaah increase you in good.
For you to realize as to if this comes under a "necessity", you should consult a person of knowledge who is well-grounded in terms of the Fiqh of Transaction, and who knows the situation of the people in your land. Not only that, but also consult your own heart sincerely as to if this comes under a "necessity".
Generally, there are ways around this. Many people have done it, I have done it alhamdulillaah. You can perhaps borrow money from your parents, brothers, uncles, aunties, relatives, friends etc. You will be doing a favour for your muslim brothers/sisters by taking a HALAAL loan from them as Allaah will bless their money for them. Remember to look into all others sorts of avenues, before thinking about this sort of a contract.
I hope you did not take any sort of offense. I am pretty bad at typing out what I really want to say, so forgive me if I sounded judgemental or so- as that was definately not my intention.
Wassalaamu `alaykum
was asked all sorts of questions and he never criticized people for asking them.
