Some people feel unable to use existing student loans due to
their faith. This is most common among some Muslims because their
religion prohibits engagement with interest, which is applied to
all student loans.
We support the goals of every person who meets the requirements
and wants to go to university. That's why we're
developing a new student finance system that doesn't include
interest and is compatible with Islamic finance principles.
What is Alternative Student Finance and how will it
work?
Alternative Student Finance (ASF) will be one of the first
state-backed student loan schemes in the world that is compliant
with Islamic finance principles. It will mean that those who
can't take out interest-bearing loans for religious reasons can
access student finance.
ASF will be certified as being compliant with Islamic finance
principles by an independent Islamic Finance Supervisory Board,
made up of experts in Islamic finance. It will use the Islamic
finance principle of Takaful, to provide a form of group based
mutual support.
Prospective undergraduate students will apply for an ‘alternative
payment' for both their tuition fees and living costs, instead of
a traditional student loan.
Like existing student loans, applications will be made through
Student Finance England.
After finishing or leaving their studies, students will repay
contributions to a fund that will only be used to help future
students access ASF. These contributions will be equivalent to
the repayments made for traditional student loans.
Does this mean students who use ASF will pay less than
those who opt for a student loan?
No. ASF is designed to make sure all students are treated the
same. Those who use ASF will pay the same amount towards their
studies as those who use the standard student loan system.
All payments and contributions made through ASF will mirror those
made by students who use regular student finance. This means that
students will be able to apply for the same amount of financial
support regardless of the system they use.
Similarly, the amounts and timings of contributions back to the
Takaful fund will also be identical to repayments made for
mainstream loans. ASF contributions, like repayments of student
loans, will be based solely on what people earn, not the amount
of finance received.
Who can apply for ASF?
ASF will be open to any student who is eligible for student
finance.
When will ASF be available?
From the 2026/27 academic year, the Lifelong Learning Entitlement
(LLE) will transform the post-18 student finance system in
England. We aim to introduce ASF as soon as possible after the
LLE is introduced, to make sure the ASF product matches
mainstream student finance.
What can you do in the meantime if you can't take out a
student loan for religious reasons?
Here are some sources of financial support that might be worth
considering:
You could also consider a degree apprenticeship,
which allows you to study towards an undergraduate or
postgraduate degree while you work, without paying for tuition.
