I had a rather depressing day last Wednesday. I was filming a piece for my new series on student finance at a sixth form college in Hammersmith, west London, and there were many sparky 17-year-olds there.
My aim was to try to ensure they weren’t wrongly put off going to university because of the misperceptions over student finance in England. While much of that involves an explanation – there’s a more serious problem for religious Muslim students.
(For more on the general issues, see Student Finance Mythbusting and Student Loans aren’t a debt – time to rename them?)
Under Sharia law, paying interest is prohibited. This is why Islamic banking often works using a capital, rather than interest repayment.
Now, of course, the new student loan system (introduced for starters in 2012 and onwards) isn’t the first time interest has been charged – but it is the first time it has been at ‘real’ interest rates. In the past interest was set at the rate of inflation (see Should I Repay My Student Loan? for a full breakdown) meaning that in effect, it had no real cost. So from what I’m aware, some Muslim students found it acceptable.
Yet under the new system, real interest, set at up to 3% above RPI inflation is attached to student loans (see student loan interest). And while in practice many will never get close to needing to repay the interest, as I explain in Why student loans will be interest free for many, that’s not enough.
A decent chunk of the potential Muslim students I met had a real problem with this (of course for some it isn’t an issue, there is always a spectrum of belief) and felt they were unable to take student loans.
Therefore to go to university, their parents are going to need to find £27,000 upfront, plus living costs – an amount simply unreachable for the enormous majority of families.
Now I’ve been aware of this issue in the past, it’s something I’ve discussed with the responsible Government department and I know the NUS has campaigned on it. Yet to be there face to face and meet this group of bright kids who are being disenfranchised was truly depressing.
Something needs to be done – to replicate the system at roughly the same cost to the student in a way that is Sharia complaint, as is done in other forms of finance, can’t be beyond wit and wisdom.
PS. Having tweeted a link to this blog, a number of responses are from people saying things like “we don’t want Sharia law in Britain”. Not quite sure what that has to do with this – of course I’m not suggesting the UK live under Sharia law.
Yet to allow an option of a Sharia compliant system of finance with a similar net result that is compliant with Sharia law, without any special privileges, seems to me a good thing. And for all the “Muslims should integrate” comments, university is great for increasing a widened life experience and social cohesion.