Subject : Religious Remarks on Students' Loan and Grant Fund
Fatwa Number : 2817
Date : 30-07-2013
Classified : Usury (interest) &Loans
Fatwa Type : Search Fatawaa

Question :

What is the religious view of a fund organization which gives loans and grants to financially incapable students who finish secondary school in order to pursue their higher education at universities and colleges?

The Answer :

All praise be to Allah and may peace be upon Prophet Muhammad.

After studying the contract and discussing its items, we have come up with the following notes:

First: The fifth point of the first item in the contract states: “Commitment to give 25 volunteer work hours in service of the society and the Fund’s approval of the party served is required.” This item must include a phrase stating that the lending party is not the beneficiary of this volunteer work directly or indirectly.

Second: The third item says: “[The student] is responsible to pay all the costs that result from such delay as estimated by the Fund … and the student has no right to object.”

We are of the view that the organization must not estimate these extra costs. Rather, they must be estimated by a third party.

Third: Item four states: “The student is committed to inform the organization of any other loans or grants received from any side.” We believe that this item must be deleted and restricted to study grants.

Fourth: Item six asks the student to write a promissory note to pay the whole amount of the loan or a check of the same amount. We believe that one of the two is enough, or they should be made clearly connected .And Allah knows best.



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