I am a Muslim student living in Norway, studying in university there. I have a question about student loans given by the university. This loan is interest-free, and it is given to students, and if the students pass the half-year exam, the loan is turned into a grant or gift from the university, but if they do not pass the exam, it remains as an interest-free loan until the end-of-year exam. But if a student leaves or graduates, or if the loan is not turned into a grant or gift from the university, it becomes a debt, and in these three cases, interest is to be paid on the loan. My question is: is it permissible for me to avail myself of this loan? Is it halaal? Because I am going to complete my studies this year, and by Allah’s grace I did not fail in any year at all, and it will never happen, by Allah’s leave, in the future. Therefore if I take this loan, it will turn into a grant, in sha Allah, and if I fail in any exam or stop studying, praise be to Allah I have money to pay off this loan immediately. I am not in need of this loan, but because it will turn into a grant after the exam, I want to take it. What is the Islamic ruling on this matter?
Praise
be to Allah
With regard to student loans, they must fall into one of
three categories:
1.
Where the loan does not involve riba, and the student pays
back what he took, without any interest. In this case it is permissible to
take this loan, and there is no problem.
2.
Where the loan involves riba, and the one who takes the loan
is required to pay back the loan with interest. In this case it is not
permissible to take this loan, because it is riba.
3.
Where the loan does not involve riba originally, but in some
cases it involves a riba-based condition, such as when the student is told:
This loan is to be paid back as is, or it is a grant to you if you pass all
your exams, but if you give up studying or fail, or you delay repaying the
loan beyond the stipulated period, you will have to repay the loan with
interest at a specific rate. In this case it is also not permissible to take
that loan, even if the borrower is determined to succeed or is confident
that he will not have to pay interest, because this contract involves
approving of the riba-based condition, in addition to the possibility of
falling into it, if circumstances arise that lead to him not succeeding or
not completing his studies.
For more information, please see the answer to question no.
136378
Based on that, it is not permissible for you to take this
loan, because it involves a riba-based condition, and you stated that you do
not need that loan. This requires you to refrain from taking this loan.
And Allah knows best.
