Student loans provided by government institutions or some charitable foundations are typically given with low interest rates and long-term repayment plans. Whether these loans are permissible in Islam depends on the principles governing money exchange and the presence of interest.
In Islamic finance, two basic rules apply:
- For the exchange of same-kind money: Equal amounts must be exchanged immediately, meaning no interest is allowed.
- For the exchange of different kinds of money: The exchange must be without delay, meaning no interest is involved.
These rules forbid interest-based transactions. However, loans provided by government institutions or educational foundations are intended to preserve the value of money and provide opportunities to other students, rather than to profit from interest. Therefore, for students who cannot afford their education through other means, accepting these loans is permissible as an exception.
In conclusion, students who cannot find alternative ways to pay for their education may accept these loans. However, it is always preferred to find interest-free alternatives.