Thursday, March 22, 2007

Muslim student loans 

In an entry on the Chronicle of Higher Ed's Daily News Blog, a new report is noted that talks about barriers to Islamic students studying in western schools.
The report offers nearly five dozen recommendations for improvements. Among them are retaining Muslim faculty members and offering halal meals, which meet Islam�s dietary restrictions. One of the biggest problems facing Muslim students is the loan-based student-aid system.

�Interest-bearing loans are forbidden in Islam, which means that provincial- and federal-government loans are simply off-limits for many practicing Muslims,� said Mohamed Sheibani, president of the Muslim Students� Association National of the U.S. and Canada...
The Islamic banking restrictions are familiar, and these countries have developed many instruments that allow for purchase-and-resale transactions that meet Islamic strictures. There's little reason Islamic banking could not create these student loans. But there's also no reason why a western country that engages in assisting the student loan market -- not a great idea in my view, but a widely accepted practice -- should be compelled to create a secondary market for Muslim student loans.

In principle if a university wanted to attract these students it would be possible to create a contract to charge them a higher tuition than non-Islamic students, then have them replay the loan on installment after graduation without interest. The university would receive the same amount of money either way. But could you imagine how the news would handle the idea that Islamic students paid a higher tuition?