Student Loans and Islam

Student loans play a major role in someone’s life. A lot of people spend huge chunks of their earnings paying off their student loans after graduation. There really isn’t life after college after all. The bigger the profession, the higher the student loans i.e. doctors are still chained to this system and work like slaves to be able to make ends meet. The longer it takes to repay a student loan, the more interest is paid on the loan. In the United States for instance, your credit worthiness is affected if the loan is not paid on time. A bad credit rating means you cannot have good housing, you will not be able to lease or buy a car, your insurance is affected and so on and so forth. In other words you graduate with a Masters or PhD, get a good job but are inundated with heavy bills and a tarnished financial record to your name if you don’t pay up.

The UK government on the other hand has been toying with the idea of student loans which are Sharia-compliant. It may seem a little far fetched but on the contrary it makes total sense. Even though the repayment is identical to the conventional system, it will be void of any interest.  This Alternative Finance system would be funded under Sharia-compliance laws and overseen by a Sharia Advisory Committee. A public consultation sanctioned by the UK government ended in September 2014 with recommendations to offer an Alternative Finance Product.

The ‘mutual benefit’ product which was the result of the recommendations emanating from the consultations received preliminary approval from Al Rayan Bank’s Sharia supervisory committee. The UK government for its part is committed to following through with the product even though there isn’t any timeline yet.

The idea is garnering interest from financial institutions in other countries across the world. Through ‘mutual benefit’, students would be encouraged to take on more challenges without the shadow of student loan interests looming over them. For students who have already fallen into the quicksand of student loans, the way to dig their way out may seem tedious but the most important thing is not to panic. Whilst in college or university there are many opportunities to reduce the student loan.

Innovative Ways to Repay Your Student Loans

#1.Resident Assistant

An RA is responsible for a section of a dorm and would be in charge of various responsibilities. You do get perks like your own room without any roommate, respect and most importantly pay. Working as an RA could be used in reducing one’s student loan.

#2.Teachers Assistant

A teacher’s assistant, usually a senior, helps the lecturer in teaching his class. In some instances the TA can even fill in for the lecturer. However you have to be an exemplary student to be selected for this task. The perks are you get paid but most importantly, you earn the trust of student whom you can now tutor separately which is additional income. You learn when you teach so it’s another form of studying but most importantly; you have additional income to cover some part of the student loan. The national average Student Assistant salary is $22,486.

Hopefully graduates will soon start enjoying life after the lecture halls without the big shadow of student loans trailing them wherever they go.

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