The National Union of Students (NUS) today welcomes the news that David Cameron has stated that the government will introduce Sharia compliant student loans, noting that this needs to happen as a matter of urgency.
Introducing these loans is something that NUS has campaigned for since the initial proposal for £9000 fees in 2010. NUS will be highlighting the need for a new model to be applied to loans in both higher and further education, including for the new 24+ advanced learner loans, and pushing for government to move quickly so that no more students are deterred because the student loan model is incompatible with their religious beliefs.
Many Muslim students feel unable to take out student loans because of religious objections to interest bearing loans. This objection could also apply to some adherents of other Abrahamic faiths, but mainly affects Muslim students.
Under the new £9000 fee repayment system, a ‘real’ rate of interest is charged on student loans. This operates on a sliding scale from RPI for those earning £21,000p.a. or less to a maximum of RPI +3% for those earning £41,000 or above. Many Muslim students and representative organisations feel this real rate of interest makes student loans inaccessible to them.
NUS has been campaigning with FOSIS, Al-Qalam and 1st Ethical for government to introduce a Sharia-compliant loan system, and those organisations have worked to develop a model which could be offered by the Student Loans Company in addition to their existing conventional student loan scheme. This model replicates the pricing and terms of the conventional model through a commodity murabaha structure, which avoids the use of interest but means students repaying exactly the same amount overall.
Toni Pearce, NUS President, said:
“It’s fantastic that the prime minister has accepted this very real need for sharia compliant loans. It is simply not acceptable to expect people to drop their religious beliefs in order to access education.
“How this loan is modelled will be particularly important and it is crucial that this model is applied to all loans, for both further and higher education. The current situation is simply unacceptable, and Government must act quickly to ensure it is finally addressed.”
Notes to editors:
For press enquiries please contact NUS Press Office on 07866 695 010 email@example.com
To find out more information about the proposed model developed by the organisations listed above, please visit http://www.1stethical.com/an-alternative-student-finance-scheme/