How Can I Finance College the Halal Way?

Answered by Shaykh Muhammad Carr

Question 

I am a senior undergraduate student pursuing my degree in Kansas.

I am trying my best to avoid riba and student loans altogether.

Based on current estimates, my educational expenses for the upcoming academic year (Fall and Spring semesters) will be approximately $6,500–$7,500, including anticipated tuition increases and university fees.

My university offers a payment plan that allows tuition to be paid in fixed installments throughout the semester, but it charges a one-time enrollment or setup fee each semester. Assuming there are no late-payment penalties involving interest, would enrolling in such a plan be considered permissible? In other words, would it be halal to pay the setup fee and then make the required installment payments according to the schedule?

Additionally, I would appreciate any advice on practical, halal ways for women to support themselves financially and pay for college expenses without resorting to riba-based loans.

Answer

In the Name of Allah, the Most Merciful and Compassionate.

May Allah reward you for striving to ensure that your student financing is Sharīʿa-compliant. Your concern to avoid what is unlawful is itself a sign of a sincere intention, and as Shaykh Shaghuri said, “Never will one who comes with a true intention be disappointed”.

The payment plan described above is permissible. The fee in question is a setup or enrolment charge rather than interest on the outstanding balance. The university may charge an amount that reflects its actual administrative and operational costs. [See AAOIFI]

In other words, it is permissible to pay the setup fee and then make the required instalment payments according to the agreed schedule. You should, however, make every effort to avoid late payments. The mere possibility of incurring interest-bearing penalties for late payment does not render the arrangement impermissible, due to the prevalence of such clauses and the principle of general affliction (umum al-balwa).

May Allah make your affairs easy and place baraka in your efforts. ‘And whoever is mindful of Allah, He will make for him a way out and provide for him from where he does not expect.’ [Quran, 65:2–3]

Scholarships and other forms of financial assistance are often available within the Muslim community, though locating them may require some initiative.

Consider speaking with your local imam and reaching out to the local masjid and community organizations.

Family is the closest and most unassuming source of support. The Prophet (May Allah bless him and grant him peace) said, ‘Whoever wishes to have his lifespan extended and his provision blessed should maintain family ties.’ [Muslim]

And with Allah alone is our success.

[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Related Answers

Should I Strive to Pay Off My Interest-Based Student Loan Sooner? —Discusses the religious and ethical considerations surrounding existing student loans.

Is a Loan That Charges a Flat Fee Halal? — A flat fee on a loan is riba regardless of wording.

Is It Permissible to Impose Late Payment Fees on Customers? — Contemporary opinions and the OIC installment-sale resolution.

Can I Work In a Store That Offers a Buy-Now-Pay-Later Option? — When a two-price deferred arrangement falls outside riba.

Is Extra Payment for Deferred Land Purchase Permissible? — The boundary of riba in deferred-payment sales.

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door for students. As an imam, he has the unique opportunity to serve his community in daily life. 

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari’ah Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.