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  1. Sharia Compliant Finance
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Sharia Compliant Finance

Faith and Finance Information

Some Muslim students and members of other faiths may not wish to take out Student Finance England (SFE) loans to finance their study and living costs while studying because of the interest added to the repayment of such loans.

The UK government has been looking into the possibility of an alternative Sharia-compliant funding system which would be available alongside traditional student loans. Consultation was conducted in September 2014 which has resulted in an agreement to offer an Alternative Finance product. This 'Takaful' product received preliminary support from government in the Success as a Knowledge Economy (PDF) (pg.59, 2016) report but no timescales have been published for the introduction of this. The recently published ‘Bridge Report’ (PDF) (2018) called for an introduction of alternative funding systems by 2019 (recommendation 4).

Sharia-compliant financial services guarantee that money held in these accounts is not invested in industries such as gambling, alcohol or weapons manufacturing. The proposed 'Takaful' fund would not be interest based, but would result in identical repayments to the current student loan system.

If the payment of interest and the investments made by loan companies are an issue for you, you will need to think carefully about how you plan to support yourself financially.

Support available from Trusts and Charities

You will need to ensure that you have alternative funding in place from savings, family support etc. to cover the cost of your fees and living costs. Some students find funding from charitable trusts such as the National Zakat Foundation which is specifically for UK Muslims. Other charities can be found via the charity Turn2us grants search

Please note that some trusts and charities who provide funding for students will exclude students who are eligible for government (SFE) loans regardless of whether they have taken them out or not.

You may find these external alternative funding providers useful, some of which offer sharia-compliant banking:

Possible consequences of not taking out loans for studies

It is important to understand that if you decide for faith reasons not to take a loan for your studies, this may have an effect on your eligibility for other sources of funding.

  • Banks often want to see evidence of a Maintenance Loan before opening a student account with the interest-free overdraft facility
  • If you are entitled to claim welfare benefits as a student, the office assessing your benefit claim will assume you have taken your loan entitlement and will reduce your benefit entitlement accordingly

You may have a number of questions about how much money you will need to study for your degree and where this money may come from.

All students need to carefully plan for studying for a degree for 3 years or on some programmes longer. Tuition fees for most undergraduate courses are currently £9250 per year and you will need to plan for rent for at least 39 weeks of term (longer on some courses) and money for essentials like food, books, travel, clothes and bills. Our website provides information and advice on managing your finances, including how to build a budget and sources of funding in the ‘Tools’ section.

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