The UK government continues to kick the box amid renewed calls to introduce a Sharia-compliant alternative to college student interest loans.
Eight years after then Prime Minister David Cameron pledged to introduce a way for students to raise money for tuition and living expenses without paying interest on their loans, ministers are still unable to commit to the timing of its introduction.
This despite the existence of a ready-to-use mechanism ordered some time ago by the Ministry of Education (DfE) which, according to its modeler, is fully compliant with Sharia law, equivalent in all respects to the established system. and simple to implement.
“Never again should a Muslim in Britain feel unable to go to college because he cannot get a student loan just because of his religion,” Cameron told the World Islamic Economic Forum in 2013 with the aim of combating the financial exclusion of Muslims in Great Britain. by encouraging the development of Islamic finance.
The year before, university fees in England and Wales tripled to £ 9,000 a year, meaning most students had to take out a loan from the Student Loans Company (SLC), an organization government-owned non-profit, to fund their education.
The aggregate interest paid on these loans is calculated based on the prevailing retail price index plus a fixed percentage. The interest rate is currently set at 5.6% for graduates earning over £ 49,000 per year.
Interest starts accruing once graduates reach a threshold of £ 27,295 per year and applies for 30 years from the time the loan is taken out. The loan is canceled in the event of the graduate’s death and often in the event of disability.
Speaking in the House of Commons on Thursday (July 15), Opposition MP Stephen Timms called on the DfE to commit to a timeline for the implementation of alternative student loans so that they can be provided by the time academic year 2022-2023.
“It is very hurtful that the government just does not care to keep the promises made eight years ago to so many people in this community,” he told the House during an adjournment debate. .
“The young Muslims waited patiently. How much longer do they have to wait?
Adjournment proceedings give Members the opportunity to raise a question and receive a response from the minister concerned.
“Some young Muslims postpone college until they have saved up to pay their tuition fees,” Timms said. “Some with heavy hearts take out a loan and feel bad about it forever. Others don’t withdraw it at all. This is the reality of young British Muslims today.
Michelle Donelan, Minister of State for Education, responded by saying the government intends to address the issue of student funding when it concludes a major education funding review that has been released. in 2019, although she hasn’t confirmed when that will be.
Dr. Philip Augar’s 200-page review contained a paragraph stating: “Students should be able to access financial support consistent with their religious beliefs. The government will need to carefully consider how the changes we are proposing affect plans to introduce an alternative student financing system for students who feel unable to access interest-bearing student loans for reasons of faith.
Donelan said the government intended to respond to Augar’s review in its entirety sooner, but was forced to postpone this due to the pandemic.
“We have decided to align a decision on the implementation of alternative student funding with the outcome of the [Augar] see again. We have done this to ensure that the terms of any package under Alternative Student Funding are the same as for regular student aid. We will provide an update on a Sharia Compliant Student Funding product when we complete the Post-18 Education and Funding Review.
“More broadly, I can assure that this government is committed to ensuring that higher education is accessible to all, regardless of where they come from, their religion or their race,” she added.
CALENDAR: UK GOVERNMENT AND ISLAMIC STUDENT LOANS
2013: David Cameron ad the government will introduce sharia-compliant student loans.
2015 : Green paper recognizing that the government will more fully develop a takaful loan product.
2016: white paper stated that there is a real need to support students who feel unable to use interest-bearing loans, and that “we are going to introduce for the first time an alternative student finance product that will avoid paying interest “.
2017: Law on Higher Education and Research receives royal assent. Activists hope this will pave the way for the implementation of the takaful loan model.
2019: Release of Review of post-18 education and funding (Augar review), which presents the main factors of attractiveness of alternative student finance.
2020: Ministers delay response to August review, citing new priorities due to pandemic.
While the machinery of government is expected to turn slowly, it is surprising that the gears of DfE have been turning for so long, given that an alternative student funding mechanism was proposed in 2014 and met with overwhelming approval in a consultation. which attracted a record number of responses at the time.
The consultation drew nearly 20,000 comments, with 94% saying there would be “demand among students and potential students for a sharia-compliant alternative financing product” and 81% would find the takaful-based mechanism ” acceptable ”.
The proposed model was a takaful system in which students contribute to the system to guarantee each other against losses through a cooperative. Repayments, debt levels and cost to government would be the same as for conventional student loans.
The UK Islamic Finance Council (UKIFC) was tasked by the DfE to create a detailed structure for the program using a mechanism that could be implemented under the conventional student loan structure.
“What we have done successfully in the two years we have worked with the DfE is to develop a viable and comparable structure which can be implemented by the government without any material obstacles in doing so,” said UKIFC advisory board member Omar Shaikh told Salaam Gateway.
“There will be an operational process that the SLC will need to consider when implementing this, but none of this is insurmountable or beyond its capabilities. We have performed tests with the SLC to make sure it can be implemented into existing processes.
Legislative additions might be needed to introduce alternative student funding, however, but this can have a legislative cycle of up to 18 months, Shaikh said, allowing it to be finalized in time for the 2022-2023 academic year.
“The delay since we presented our findings is due to the reasons the government publicly said it was conducting a full review of the student loans process during the post-18 review.
“That’s why there remains this perceived hiatus. We remain optimistic about the government’s prosecution, but it is disappointing that it has taken so long. The government needs to prioritize this better, ”Shaikh added.
On Friday July 16, students from schools and universities will gather in front of the DfE offices in London for a demonstration to raise awareness of the issue.
“We are trying to encourage everyone who cares and thinks it shouldn’t be a problem to get together and bring a book and read it or just study,” said Asha Hassan, final year student. of Medicine at the University of Exeter who took a year of his studies to campaign for the government to keep its promise.
“We just want to show that we want to access our right to learn in a tolerant and progressive country. Who knows who will show up, but even if it’s only five or ten people, the picture will be there.
Hassan, who relied on scholarships and grants to fund his studies, said the issue had been overlooked for too long and few people were aware of Cameron’s pledge in 2013.
“There is no reason for [the government] should delay this. The experts who designed the system say it can be made available. What remains is the political will, but they have shown that there is no will; they will be happy to make it last another 10 years unless we act, ”Hassan told Salaam Gateway.
“The main thing is that no one knows. Muslims suffered in silence.
DIFFERENT POINTS OF VIEW
Perhaps one of the reasons the issue has remained under the rug is divergent views on whether conventional student loans fall under riba.
Various academics and fatwa organizations in the UK and Europe, including the European Fatwa and Research Council, have ruled that Muslim students are allowed to take out university loans and that there is no no interest in doing so.
The arguments are that the loan is not actually paid to the student, so there is no ownership of the money, nor is there a choice of what to do with it. student wishes. In addition, the loan is written off after a specified period or if the student is disabled or dies.
Many Muslim students will accept such advice and happily take out a conventional student loan.
Nevertheless, there will still be many who follow their own understanding of riba.
While UKIFC’s Omar Shaikh thinks student loans fall under riba, he says this is a moot point as a sharia-based alternative was promised, even though it is important for “five, 50, 500 or 5 million students ”.
The agenda for Islamic students follows the principle of financial inclusion and it is about ensuring that every part of society has access and is now well beyond a problem of measuring demand ”, did he declare.
“We know that the government-led consultation on this issue elicited an important response, and from that, we clearly know that this is a problem. If that were not a problem, the Prime Minister would not have made this promise in 2013. The problem has become the fact that the government is keeping its promises to minority communities.
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