All pupil loans at the moment cost curiosity. This implies some folks really feel unable to make use of present pupil loans for college or school resulting from 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 an alternative choice to curiosity funds. This new pupil finance product will probably be appropriate with Islamic finance ideas. Will probably be referred to as various pupil finance.
How various pupil finance will work
The brand new finance system will probably be licensed as being Sharia-compliant. It should use the Islamic finance precept of Takaful, to offer a type of group based mostly mutual assist.
Various pupil finance will probably be obtainable for any undergraduate college students who’re eligible for pupil finance.
College students will apply for an alternate fee for each their tuition charges and residing prices. That is as a substitute of an interest-bearing mortgage. They’ll apply in the identical means as a conventional pupil mortgage, by means of Pupil Finance England.
After they depart their research, college students will repay contributions. The contributions are then ‘ringfenced’ to assist future college students. Which means that the funds are solely used for offering various pupil finance.
College students making use of for assist by way of various pupil finance won’t endure any detriment or expertise any benefit by means of selecting to entry pupil assist by way of this route.
Funds and contributions
Various 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 economic assist.
College students will contribute again to a Takaful fund of the identical quantity and similtaneously college students making repayments for standard loans. We are going to base contributions on what folks earn, not what they’ve obtained.
Creating various pupil finance
We’re working with the Islamic Finance Council UK to guarantee that the choice pupil finance system we introduce is compliant with Sharia legislation.
We now have:
We might want to create secondary laws to set out the small print of how various pupil finance will work. It will embody:
the quantity of finance college students will probably be entitled to
how we are going to calculate contributions again to the Takaful fund
Various pupil finance might want to work alongside present pupil loans. The Pupil Loans Firm will handle each funding techniques. It will permit all potential college students to use in an identical means.
Various pupil finance will kind 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 funding choices to think about
Test what additional assist is accessible for undergraduate college students. Some college students can also be eligible for bursaries, scholarships and awards.
Diploma apprenticeships permit folks to review in the direction of an undergraduate or grasp’s diploma whereas working and with out paying for tuition.