04/04/2014 05:25 BST | Updated 04/04/2014 05:59 BST

Sharia Student Loans To Be Introduced To Encourage More Muslims Into University

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The government is planning to introduce student loans which will be compliant with Sharia law in order to encourage more Muslims to attend university.

Concerns are bound to be raised as to whether they will end up paying less in tuition fees than non-Muslim students, who will continue to pay back their loans with interest.

Sharia law forbids Muslims from taking out loans that generate interest, and the new system is to be based on the Takaful structure adopted in Islamic finance. Takaful is a co-operative system of reimbursement which allows a group of people to provide financial assistance to each other.

The department for business, innovation and skills (BIS) released a document setting out the new proposal, which insisted both groups of students would be treated the same.

"The principles of Sharia law recognise the value of money over time. Given the long period over which most students would make repayments into the fund, the total contribution they would be obligated to make would be based on a benchmark.

"This benchmark would be set relative to the traditional loan system and would ensure that students who made use of either the alternative finance product or traditional loans would be treated the same."

The money paid back by Muslim students will be ring fenced for future students who will benefit from the fund, "allowing them to complete their studies as the original student did".

According to Omar Ali, president of the Federation of Student Islamic Societies (FOSIS), many Muslims decide not to continue their education at university due to the because of the tuition fees system. He said he "welcomed" the new proposal.

In 2011, Muslim students in Britain protested the "discriminatory" government reforms which raised interest rates on tuition fees. A spokesperson for FOSIS said at the time: "Previously, the interest rate [on tuition fees] was at the market rate of inflation. The problem now is that the interest is above the market rate. Because the rate of interest is above the rate of inflation, it is quite blatant usury."