Short answer
A student loan with interest, even if indexed to inflation, is still an interest-bearing loan: most institutions forbid it (International Islamic Fiqh Academy, resolutions 10 and 42). Grants, interest-free personal loans and, in the United Kingdom, the Alternative Student Finance announced by the government are the alternatives.
What the institutions say
Official positions, with their reference. The badge sums up the institution’s position, not an opinion of Assabile.
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International Islamic Fiqh Academy Organisation of Islamic Cooperation, JeddahProhibited
An interest-bearing loan is prohibited, and a debt may not be indexed to the price level; an interest-free public loan is permitted.
Resolutions 10 (10/2) and 42 (4/5)
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AMJA Assembly of Muslim Jurists of AmericaProhibited
A limited income is not enough to constitute a necessity that would permit an interest-bearing loan.
Opinions on necessity and interest-bearing loans
Positions are reported as they stand; other scholars may hold other views. Method and disclaimers
Depending on your country
- United Kingdom
- The public student loan carries indexed interest. The government is preparing an interest-free “Alternative Student Finance”, based on takaful and certified by an independent board; as of August 2026, no launch date had been set.
- France
- The state-guaranteed student loan is a bank loan with interest. Means-tested grants (bourses sur critères sociaux), support from local authorities and interest-free prêts d’honneur (personal loans from associations and foundations) are alternatives.
- Türkiye
- The KYK student loan (state student loan) was reformed in 2022 so that only the amount received is repaid; check the conditions of your contract if repayment is deferred.
- United States
- Federal and private loans charge interest; a few community organisations offer interest-free loans.
Is indexed interest really interest?
Many public student loans apply a rate linked to inflation. The International Islamic Fiqh Academy ruled that debts are repaid in the same amount and may not be indexed to the price level (resolution 42 (4/5)). An agreed surplus, even one meant to compensate for inflation, therefore remains a surplus on a loan.
Some scholars have likened the British system to a graduate tax, since repayment depends on income and the debt is written off after a certain period; others reply that the contract is still a loan with interest. Most institutions advise avoiding these loans when another route exists.
The alternatives
- Public, regional or institutional grants and bursaries.
- Interest-free personal loans from associations or foundations: see zero-interest loans.
- United Kingdom: Alternative Student Finance, based on takaful, is meant to offer interest-free funding with repayments equivalent to those of the conventional loan. It was still in preparation in 2026.
- Working while studying and interest-free help from family.
Where no alternative exists, consult a scholar: necessity is assessed case by case.
The verses
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ فَمَن جَآءَهُۥ مَوْعِظَةٌ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ هُمْ فِيهَا خَٰلِدُونَ ٢٧٥
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allāh has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allāh. But whoever returns [to dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Frequently asked questions
I already have a British student loan: what should I do?
Scholars advise repaying it according to the contract, not taking out a new one if an alternative exists, and repenting. For what to do in your case, ask a scholar.