Whatever happened to sharia-compliant student finance?

There’s an argument that people reel off when students are calling for refunds - that most students won’t benefit because of the way the system is designed.

Jim is an Associate Editor at Wonkhe

I baulk at it at the best of times – partly because it ignores international students and postgraduates, and partly because it assumes that student loan terms and conditions will survive intact forever, when we’re (still) in the middle of a(n Augar) review that might well unilaterally and retrospectively vary them.

But I baulk at it mainly because it ignores that 10 percent of those studying first degrees at English universities are paying upfront. Some of that will be about having untold riches – but a big slice of that will be about religion.

There’s a fascinating paper from the Federation of Student Islamic Societies (FOSIS) from eighteen years ago that argued that the current system of student loans can cause financial difficulties for Muslim students, given they must be repaid with interest (riba), something that’s forbidden in Islam. It argues that many Muslim scholars have given the opinion that taking student loans is prohibited, which can cause major hardship or act as a barrier to entry to higher education for some Muslim students.

It’s an argument that goes on to be picked up in an unpublished Department of Business, Innovation and Skills report into the Muslim student experience in 2009, is noted in the Browne reforms’ equality impact assessment in 2010, and is highlighted in that student experience study’s literature review, published in 2011. By 2013 even then prime minister David Cameron had committed to the introduction of an alternative, sharia-compliant loan system:

“Just last week we made new commitments to open up new forms of student loans and business startup loans for Islamic students and entrepreneurs,” he told the World Islamic Economic Forum eight years ago. “Let me be clear what this means. Never again should a Muslim in Britain feel unable to go to university because they cannot get a student loan – simply because of their religion.”

The results of a 2014 consultation then agreed to sort out sharia-compliant finance – it is promised in the higher education green paper of 2015, and then two years later sections 86 and 87 of 2017’s Higher Education and Research Act created the provision for the state to offer it.

But it still didn’t appear. Universities minister Jo Johnson said it was “a priority” in 2017, his successor Sam Gyimah promised an “update and a timetable” in 2018, his successor Chris Skidmore said that Augar would sort it out in early 2019, and in the summer Augar itself said:

It is important that students should be able to access finance support that is compatible with their religious beliefs. The government will need to consider carefully how the changes we are proposing to the student finance system affect plans to introduce a system of alternative student finance for students who feel unable to access interest-bearing student loans for reasons of faith.”

A month later in the Lords, Viscount Younger said that the government had received advice from the specialist consultants it appointed and would set out plans for implementation “at the spending review” as it “concludes the post-18 review”, something Chris Skidmore went on to reiterate in both October 2019 and January 2020. But by earlier this month, ministers weren’t even tying implementation to Augar or the CSR – Michelle Donelan just said:

The government is committed to ensuring that all students with the potential to benefit from further and higher education are able to access it. The government will provide a further update on the Alternative Student Finance product in due course.

Is there a more miserable phrase in political implementation than “in due course”?

One response to “Whatever happened to sharia-compliant student finance?

  1. After all this, they might think it easier to simply get rid of (real) interest on the loans, rather than go through the hassle of introducing a new Shariah-compliant product.

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