Experts weigh in on whether student loans are Shariah compliant
MELBOURNE, Australia, July 04 2022 (GLOBE NEWSWIRE) — According to halal finance experts, Hejaz Financial Services, Islamic finance the laws do not allow Muslims to borrow at interest. In the center of islamic finance is the belief that money has no intrinsic value, but is simply a medium of exchange. Benefiting from the loan of money by charging interest or repaying more than the original amount borrowed (riba) is prohibited.
Australian Muslim students may be deterred from taking out student loans from the government because they do not fully understand how loans work. The idea that student loans might not comply Sharia loans can be a barrier to higher education for Muslims or cause financial hardship for those who choose to fund their own university education.
As Hejaz Financial Services explains, student loan repayment in higher education is income dependent and the Australian Higher Education Loans Program (HELP) does not include any “interest” payments. Instead, an annual adjustment to outstanding debt is applied based on inflation.
The HELP system allows the Australian government to minimize its losses on loans, rather than extract money from them. Another important factor is that the Australian government grants the loan and also receives the repayments without involving a bank or a third party lender. Essentially, no one benefits from government funded student loans in Australia.
With around 1.2 million Muslims living in Australia, it is clear that the growing community needs better access to resources that allow them to make informed decisions about their finances taking into account their religious beliefs, says Hejaz Financial Services.
As one of Australia’s only Islamic and ethically approved financial providers, Hejaz Financial Services has been providing financial services and support to Muslims for over a decade. Currently in the process of applying to become Australia’s first 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
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