Changes in recent years to student funding and tuition fees in the UK, has meant that you may face difficult considerations around your student debt.
Important to know: The interest rate changes annually, on 1 September each year, based on the Retail Price Index (RPI) of the previous March. The interest rate charged is normally the RPI + up to 3%, depending on your circumstances and income once graduated and working. You can find the current interest rate on the Government website. However, during some periods the government may apply an interest cap to ensure students and graduates are not being charged a higher interest rate than the average found in the commercial market.
For a variety of reasons some students may choose not to, or may not be able to take out the Tuition Fee loan or the Maintenance Fee loan, including for religious reasons.
In this article:
- What are the current religious perspectives on taking out a loan?
- Are there alternatives sources of funding?
- Are there bursaries or scholarships that can support me?
- What else can I do?
For many Muslim students this is an issue; you may choose not to take out the loan as you’re required to pay interest with the loan – which is seen as forbidden in Islam. There are currently 3 different opinions on the matter by Islamic scholars.
Should not be allowed
- Interest (riba) is the student loan and therefore, any transactions with regards to it is strictly forbidden.
- If there was the possibility of having a loan without incurring interest, then it would certainly be acceptable.
- Student loans don’t necessarily fit the definition of a loan from an Islamic perspective. In order for you to be given a loan you must “be given ownership” of the money. This is clearly not the case with the Tuition Fee loan, as it is paid directly to the university.
- The prohibition of interest-based loans is partly due to the burden of the loan falling back on the family, if the person taking it on is unable to pay it back. However, in the case of student loans if you are unable to pay back the loan, it will be written off.
- You don’t need to start paying back the loan until you earn a salary of £25,000 per year.
Want vs need
- Some scholars believe there is just no clear-cut line on whether a loan is acceptable or not. You will have to weigh up whether further education is a need or a want on your own. In some cases, university can be seen as a ‘want’ – it is not essential to living a fulfilling life.
- However, it could be considered that if every Muslim opted out of university due to the high costs, this would be harmful to the wider community. Education is linked to many areas of life, including better health and lower crime rates.
- This perspective has led to the belief that if you tried your best to find halal funding and have been unable to, then it could be acceptable to take out a loan. We would however advise seeking out the opinion of a knowledgeable scholar before doing so.
For further guidance and resources on this topic:
- Islamic Viewpoint on Student Loans
- On Sh Haitham’s Student ‘Loans’ Fatwa
- An Islamic approach to student loans
Important to know: Please be aware of the university’s policy around funding and not taking up student loans. Please refer to Students who choose not to take Student Loans for detail.
There's a range of bursaries and scholarships offered by King’s and other institutions. This is a great way to obtain more money without interests.
If you're a British Muslim, you can apply for the Aziz Foundation Scholarship. The Foundation offers 100% tuition fee scholarships to British Muslims who want to take postgraduate taught (PGT) courses at UK universities, including King’s. If you're planning to take a PGT course during the academic year 2023-24, the deadline to apply is Friday 30 June 2023. You can find more information about the scholarship on the Aziz Foundation's scholarships webpage.
Even if you don’t take out a loan for religious reasons, it’s still possible to receive the Kings’ Living Bursary, which you are not required to pay back and could help towards paying your some of your fees and towards your cost of living.
You can learn more about the bursaries and scholarships offered at King's by reading our article What loans, grants or scholarships can I get from King's?
Important to know:
- If you think you might be eligible, you will still need to apply for the Maintenance Loan from Student Finance to be apply for the King’s Living Bursary.
- However, this doesn’t mean you still have to take out a loan; all you have to do is simply request £0 as a loan.
- This process allows the university to assess your household income, which is required to apply for the bursary, and they will usually obtain this information from Student Finance.
- Make sure you remember to agree to have your details shared with the university when you apply.
- If you have any concerns or wish to discuss this, contact with the Money & Housing Advice Team.
These are areas to consider when calculating your costs, with advice on how to maximise your budget and support yourself financially.
For support in planning budgets and handy tips organising your finances, our Money Mentors can help.
If you have concerns and are struggling with your finances, having difficulty paying bills, facing debt and need some advice, don’t hesitate to contact our Money Advisers.