Britain is preparing a Sharia-compliant student finance scheme that would keep graduate payments in a separate fund while leaving taxpayers responsible for unpaid balances.
Universities including University College London, Bristol and Leeds are promoting the planned Alternative Student Finance program, which would operate in England, the Telegraph reported Tuesday.
The government has paid more than £365,000 in public money to Islamic Finance Council UK to help develop the scheme, the newspaper reported. Taxpayers would still cover balances that graduates do not repay in full.
The Department for Education’s guidance confirms that the program would replace interest-bearing loans with payments for tuition and living costs. Graduates would make income-based contributions into a fund reserved exclusively for financing future students who choose the same system.
The department says eligible students of any faith could apply and would receive the same support and make payments of the same amount, at the same time, as conventional borrowers.
Separate fund and public subsidy
“This outrageous anti-British scheme creates a two-tier education system and divided society,” Reform UK education spokeswoman Suella Braverman said in comments reported by the Telegraph.
The government’s own analysis has acknowledged the financial tradeoff. A June 2016 impact assessment said reserving repayments for the alternative fund could limit Treasury’s ability to use the money for other government spending.
The assessment anticipated that officials could manage the arrangement with minimal impact on spending flexibility. It also said the government would subsidize the system and face operating costs, and it expected a risk profile similar to conventional student loans.
The department’s current guidance and its October 7 parliamentary answer do not give a total implementation or operating budget.
Islamic certification and no launch date
The proposed structure follows Takaful, an Islamic finance model based on mutual support. An independent Islamic Finance Supervisory Board would certify the program’s compliance with Islamic financial principles, and the Student Loans Company would manage it alongside conventional loans.
UCL’s own guidance says the proposed fund would avoid interest but produce repayments identical to the current student loan system. The department says the alternative would help students whose religious beliefs prevent them from taking interest-bearing loans.
The policy predates the current Labour government. Britain first proposed a Sharia-compliant student finance product in 2013 and enacted enabling provisions in the Higher Education and Research Act 2017, according to a House of Commons Library briefing.
The Dallas Express previously examined Sharia-compliant finance in Texas during a Let’s Talk Local interview with Sam Westrop, director of Islamist Watch at the Middle East Forum.
In an October 7 parliamentary answer, Labour education minister Baroness Smith of Malvern said the scheme would follow the introduction of the Lifelong Learning Entitlement, the government’s wider student finance overhaul. She promised delivery “as soon as possible” but supplied no launch date.
Provided by Dallas Express
