Channel: Haitham al-Haddad
The Prophetic Hadith states clearly the seriousness and danger of Riba “To devour one Dirham (currency) of Riba is worse than committing Zina (adultery and fornication) thirty-six times.” [Ahmad and others].
Another Hadith reads: “Riba consists of seventy-three kinds of evil, and the least of them is like having sex with one’s own mother.” [Ibn Majah , al-Hakim and others].
In the West, specifically in Norway, Muslims can get student loans, where some portion of the loan will be converted into a scholarship if you pass the exams, otherwise it remains a loan. On the loan there is no interest as long as you are a student, but when you have finished your studies interest is added to the loan. Is this loan haram? Would the person who take it be like a man having sex with his own mother?
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my question is about student loans in Norway,
there are two, two ways to apply for for this loan. Yeah, the One way is to just apply for the scholarship, which is 40% of the total amount. And then let's say if you apply and you could get maximum 100,000, you will get 40,000.
And when you and when you pass your exams, this money, it's yours, it's yours, you don't have to give it back. But you can say that against what if, what, if you if you pass your exams, you wouldn't have to pay this money back.
The other way is to apply for full loan and full scholarship. Yeah, this mean, you will get 100,040 plus percent of those is the scholarship and 60% is as a loan.
So, and if you pass your exams, this 40% will be your you don't have to pay them back. But the sixth remaining 60%, you need to
you need to pay them back. And the interest and the
interest begins when you're when you're finished with your degree with the study, and then the interest starts. So if you pay back this amount, before the interest starts, you don't pay any interest on them. But if you don't manage to pay them back before the interest starts, you will have to pay interest on them. So is is this allowed or not?
Okay, what happens if you if you fail your exams,
if you fail your exams, this obviously the 40% not all of them will be transferred to your money.
It depends on how much points you have done, if you have done the 50 50% points off your total amount than 50% of the amount will be will be given to you.
But if you if you manage to, if you manage to pass your exams later, then they will do it. give you that money. Also later. Okay. If you imagine that, like what we have in England, once you finished your study, and you could not find a job.
If you could not find a job. Yeah, you will still you can apply to pay the money later. But the rent, but the interest would still be running.
If you reach the age of 60 or 65 retirement age, yeah. And you did not pay it.
There is some
the length of
there are some issues with that you can forego the loan if something happens or something, but I don't have the full
picture of that. Yeah. But are you sure that if you don't find the job, it's still the interest will be accumulated? Yeah, the interest will be accumulated. And I'm unsure about if you can apply to say that applies all the rent, the interest is also cut. You know what I know that in different countries, including the UK. Yeah, that if you don't, if you don't find a job, they will freeze the interest okay. They will lose the interest until you start earning. And also in England, for example, about by the way that is the case in different countries. So maybe it is it is very likely to be the same here in Norway. Furthermore, if you do not earn enough money, yeah, I think above
25,000 Yeah, 25,000
pounds a year per annum, then you are not obliged to pay back. Yeah.
Unless you start earning enough money.
by the way, another question. Who gives you the loan? The government or the university? It's a bit from the government. Yeah. The government. Yeah. And the government, who owns the universities, the government, it depends. It can also be private, private universities See? Yeah.
If if these loans are provided, generally speaking, brothers and sisters, if these loans are provided by the government, to the citizens, yeah. To study in
governmental universities, universities, governmental institutions not the private ones, then that is not a typical loan
although we call it a loan and we call the interest on it as interest, but that is not a typical loan and the interest when it is not a typical river, why is this because, as if the government selling you the seat in the university
Yeah, the government is selling you the seat in the university telling you you take you study okay to study medicine or to study engineering, you have to pay me this much amount of money. So, they are selling you a service with certain conditions, okay.
This is this is one way to look at it, which means that it is not a loan. Yeah, the government is not giving you a loan.
On the other side, also, there is another element which is you can look at it, if it is a from the government, that the government is having an investment contract with you, they are investing in you. And they are telling you take this much amount of money if they are giving you Maintenance Loan for example.
Sorry, the government is telling you take study, yes, study in the university, take this much amount of money and
to to study in the university. And once you are qualified, we will share the profit
we will share the profit. Okay. This is like an investment contract. Because the government has a duty towards you as a citizen. Okay. And the government is not giving you money
to take more money in a fixed way? No. The government is providing you with this service to study. Yeah. And it might give you money to help you to study. So you are going and investing in this. Yeah. And once you are qualified, you start working and earning money, and then sharing the profit with the government. Even if we say the profit is fixed, the amount of profit that you need to share with the government is fixed. According to the Maliki's or other scholars, that is allowed. Yeah. So that is, again, another way of looking at it. And hence, generally speaking, I believe that the student loans given by Western governments or most of the Western governments, to students,
with those conditions or with similar conditions, that if you don't, if you, for example, if you don't earn, you don't pay, yeah, if you don't work, you don't pay, if you reach the age of retirement, then you don't pay which means that it is not a typical loan. And furthermore, the government is the one who controls the universities or the government is the one who owns the universities and you are studying in one of those universities, these are the general features if those general features are there, okay. I don't think that this so called the student loan is a Riba based loan and I strongly believe that you can take it especially it is a relationship between you
and the government that has a responsibility on you or towards you, sorry, responsibility towards you, I don't believe that it is even then you can use it inshallah, I just checked up and it said that the interest can be deleted, if you apply if you don't have job if you have
if you have to look after your children or something exactly, this is what I said. Yeah, this is what I said most of the Western countries, they treat it like this because it is a kind of help provided by the government to the to the to the students or to the citizens. Yeah.
Whatever if you if you study on other non government owned universities, such as Medina or a private universities, yeah, then we need to look at it, how it works. Okay. Leave it
for another time, but can we look at it? Because
how does it work? exactly the same.
But the government does not give you the loan to study locally.
It's exactly the same. You can get lonely don't mind. No, don't mind. You can you can study abroad and you'll get the same law.
Chain. Same applies. Yeah. say this, this infarct, this makes it an investment contract whereby the government is telling you take this money, yeah, go study, build yourself, have a degree work, then we will share the profit. Yeah, if you don't work, yes. Or you don't earn enough money, then you are not making profit. We are not sharing it.
Yeah. As Yeah. And by the way, I remember
that my brother who? Brother Omar Suleiman, Mashallah, who is any well acquainted in Islamic finance. He is the one who interpreted like this in the beginning. And then I remember visiting professors,
Sammy swelling, he's an expert in Islamic finance. He works for IDP, Islamic development, IDB Islamic Development Bank,
and he's expert he has he authored a number of books and he speaks good English he studied in America as well. He's a specialist in Islamic finance. And we discussed it and he completely agreed that this is the way to look at it is an investment contract. Yet it is not the typical loan, there is no element of loan alone means you have to pay it back. As it is with if you add
a surplus or so called interest, then it becomes a river otherwise, it is not a typical loan, we need to look at it from a different angle.