Ribā (interest) is a major sin in Islam, and entering into interest-bearing loans is something that one must avoid.^[1] Allah ﷻ mentions in the Qur'an that those involved in such transactions are essentially at war with Allah ﷻ and His Messenger ﷺ.^[2] The severity of this sin can be understood from the verses of the Qur'an and the hadiths of the Prophet ﷺ, which warn against the grave consequences of engaging in ribā.

Conventional student loans involve ribā, rendering them impermissible. One should pursue alternatives, such as interest-free personal loans. One possible solution may be that if one's parents are willing to provide financial assistance, they can pursue an Islamic refinance of their home and use the home equity to pay for the education. This way, payments will be made in a Sharia-compliant manner to the Islamic financing company instead of making interest-bearing payments to a loan provider.

It may be the case that one feels they have exhausted all options, but there could still be alternatives available, though they may not be the easiest or most practical in all situations. However, they might still be viable options in certain scenarios. Nonetheless, if no alternative to an interest-bearing loan is feasible and a person decides to take a conventional student loan, they should strive to repay it as quickly as possible and make sincere tawba (repentance) to Allah ﷻ.

And Allah knows best.

Mf. Zeshan Ahmed
Senior Assistant Mufti, Darul Iftaa Chicago

Checked and Approved:

Mf. Abrar Mirza
Head Mufti, Darul Iftaa Chicago