All pupil loans at present cost curiosity. This implies some folks really feel unable to make use of present pupil loans for college or faculty, as a result of their religion or conscience. That is commonest amongst some Muslims whose religion prohibits engagement with curiosity.
The federal government has dedicated to introducing a pupil finance product with a substitute for curiosity funds. This new pupil finance product might be suitable with Islamic finance ideas. It will likely be referred to as various pupil finance.
How various pupil finance will work
The brand new finance system might be licensed as being Sharia-compliant. It is going to use the Islamic finance precept of Takaful to supply a type of group-based mutual assist.
Different pupil finance might be accessible for any undergraduate college students who’re eligible for pupil finance.
College students will apply for an alternate cost for each their tuition charges and residing prices. That is as an alternative of an interest-bearing mortgage. They’ll apply in the identical approach as a standard pupil mortgage, by way of Pupil Finance England.
After they go away their research, college students will repay contributions. The contributions are then ‘ringfenced’ to assist future college students. Which means the funds are used just for offering various pupil finance.
College students making use of for assist by way of various pupil finance is not going to endure any detriment nor expertise any benefit by way of selecting to entry pupil assist by way of this route.
Funds and contributions
Different pupil finance funds made to college students will mirror conventional pupil loans. This implies college students with the identical circumstances will get the identical quantity of monetary assist.
College students will contribute again to a Takaful fund of the identical quantity and concurrently college students making repayments for typical loans. We are going to base these contributions on what folks earn, not what they’ve acquired.
Growing various pupil finance
We’re working with the Islamic Finance Council UK to make sure the choice pupil finance system we introduce is compliant with Sharia legislation.
We’ve:
We might want to create secondary laws to set out the small print of how various pupil finance will work. This may embrace:
the quantity of finance college students might be entitled to
how we’ll calculate contributions again to the Takaful fund
Different pupil finance might want to work alongside present pupil loans. The Pupil Loans Firm will handle each funding techniques. This may permit all potential college students to use in an analogous approach.
Different pupil finance will type a part of the modifications to the entire pupil finance system. From 2025, we’re introducing a extra versatile pupil finance system known as the lifelong mortgage entitlement. As various pupil finance must mirror the lifelong mortgage entitlement, we can’t introduce various pupil finance till that is in place. Different pupil finance will grow to be accessible as quickly as doable after the introduction of the lifelong mortgage entitlement, however is not going to be accessible in 2025.
Different funding choices to contemplate
Verify what additional assist is offered for undergraduate college students. Some college students may be eligible for bursaries, scholarships and awards.
Diploma apprenticeships permit folks to review in direction of an undergraduate or grasp’s diploma whereas working and with out paying for tuition.
