Experts Weigh in on Whether Student Loans Are Sharia Compliant
The Islamic faith carries a number of principles that influence how Muslims conduct their personal finances.
MELBOURNE, Australia, July 4, 2022 (Newswire.com) - According to halal finance experts, Hejaz Financial Services, Islamic finance laws do not allow Muslims to borrow on interest. Central to Islam finance is the belief that money has no intrinsic value, but instead it is simply a medium of exchange. Benefitting from lending money by charging interest or repaying more than the initial amount borrowed (riba) is forbidden.
Australian Muslim students may be deterred from taking out student loans from the Government as they don't fully understand how the loans work. The idea that student loans may not be compliant Sharia loans may act as a barrier to higher education for Muslims or could cause financial hardship for those who choose to fund their own university studies.
As Hejaz Financial Services explains, the repayment of student loans in higher education is income-contingent and the Australian Higher Education Loans Program (HELP) includes no 'interest' payment. Instead, an annual adjustment to the debt outstanding is applied in line with inflation.
The HELP system enables the Australian Government to minimise its loss from the loans, rather than make money from it. Another important factor is that the Australian Government makes the loan and also receives the repayments without involving a third-party bank or lender. Essentially, no one makes a profit from government-funded student loans in Australia.
With an estimated 1.2 million Muslims living in Australia, it is clear the growing community needs more access to resources that enable them to make informed decisions about their finances that accommodate their religious beliefs, says Hejaz Financial Services.
As one of Australia's only Islamic and ethically approved financial providers, Hejaz Financial Services has been offering financial services and support to Muslims for over a decade. Currently in the process of applying to become the first Australian 100% digital Islamic bank, contact the halal home loan and finance specialist today for more information regarding halal loans. For more information call us now on 1300 043 529
Source: Hejaz Financial Services
