Is Student Loan Haram Or Halal? Complete Guide 2023

Reviewed by: Shakira Ahmed
Fact Checked by: Shahina Islam

Is Student Loan Haram Or Halal

Is Student Loan Haram Or Halal: Are you curious about whether student loan haram is in Islam? In the contemporary world, education plays a critical role in deciding how individuals and societies grow. In order to pursue their academic goals due to the escalating expense of higher education, many students look for financial aid. 

One of the numerous readily available and often used financial options is student loan borrowing. But for Muslims, the idea of “halal” and “haram” (permissible and forbidden) is a fundamental part of their faith, and they look to Islamic teachings for direction when making financial decisions. This article seeks to answer the query: Is Student Loan Haram in Islam?

Is Student Loan Haram Or Halal?

Islamic scholars and Muslims disagree on whether or not student loans are prohibited by Islam. Some people think that because student loans have interest, which is prohibited in Islam, they are haram. Others contend that student loan interest rates are not haram since they monitor inflation and are not intended to generate profits at the expense of borrowers.

 As Narrated by Abu Huraira against loans in general: 

The Prophet said,

“Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him”.

But if a Muslim is forced to take out a school loan because they have no other choice, it is OK as long as they are serious about wanting to pay it back without accruing any more interest. Every person’s situation is different, so it’s crucial to remember that they should speak with an informed Islamic scholar to find out what is allowed for them.

Why Are Student Loans Forbidden? Is Student Loan Haram?

The main justification for this is that interest on student loans is forbidden by Sharia law in Islam. Interest, also known as riba, is prohibited because it promotes the growth of wealthy individuals or corporations at the expense of those who are less fortunate, which is against Islamic social responsibility principles.

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Many Muslims decide against taking out a student loan to pay for their education since, despite various differences between them and other types of loans, they still have to pay riba. But if a Muslim is forced to take out a school loan because they have no other choice, it is OK as long as they are serious about wanting to pay it back without accruing any more interest.

It is crucial to remember that there are Sharia-compliant alternatives to student loans, such as income-share agreements and Murabaha student financing, where investors fund students in exchange for a share of their future earnings. The former involves the bank buying the asset (in this case, education) and selling it to the student at a profit. 

Muslim students should speak to an experienced Islamic expert to find out what is appropriate for them.

What Are The Alternatives To Student Loans For Muslim Students?

There are a variety of alternatives to student loans available to Muslims, including:

Murabaha student financing: 

This is an alternative to traditional study financing that is based on Islamic principles. The asset (in this case, the education) is bought by the bank, which then sells it to the student for a profit. After that, the student makes installment payments to the bank.

Zakat and sadaqah funds:

Muslims who want to pay for their education may want to think about using zakat and sadaqah monies. Sadaqah is a voluntary charitable donation, whereas zakat is a required charity donation.

Income-share agreements: 

Investors provide funding to students in exchange for a portion of their future profits in this sort of financing. The investor and the student’s interests are aligned under this approach because the investor only reaps rewards from the student’s achievement.

Community-based financing models: 

These strategies call for collaboration amongst communities to finance education. Crowdfunding initiatives, neighborhood-based scholarships, and other types of group finance are examples of this.

It is significant to emphasize that not all students will have access to or find these options suitable, and they should speak with an informed Islamic scholar to establish what is appropriate for them.

Frequently Asked Questions

1. What is the Islamic rule on student loans?

Islamic academics and Muslims disagree on Islamic law’s norm regarding student loans. Many Muslims feel that because student loans have interest attached to them, which is against Islamic Sharia law, they are haram, or forbidden, under Islamic law.

2. Can Muslims take out a loan?

Interest on a loan is regarded as haram, or banned, in Islamic law. The idea of riba, which denotes the charging or payment of interest, serves as the foundation for this restriction. Muslims are advised to refrain from any transaction involving interest

3. Is interest on a loan haram?

Because it permits the lender, who is normally wealthier, to benefit at the expense of the borrower, who may be in a more precarious financial situation, interest is prohibited in Islam and is seen to be exploitative.


Thus to conclude, whether is student loan haram in Islam it can be said that loans whether student or of any sort are haram in Islam. While some academics categorically oppose any association with interest-based loans, others would agree to it in situations of dire need. 

Muslims who want to attend college while upholding Islamic values want to look into halal options including scholarships, family support, education savings plans, or income-sharing arrangements.

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