The British government plans to offer university students an interest-free financing option designed to comply with Islamic law. Former Home Secretary Suella Braverman has criticized the proposal, arguing that it would create a “two-tier education system.”
The Department for Education has said that some people avoid current student loans because of their religious beliefs or conscience. Under Islamic law, charging or paying interest, known as riba, is generally prohibited.
The proposed scheme would be based on takaful, a form of shared financial protection in which participants contribute to a common fund. Instead of paying interest, borrowers would make contributions to a fund intended to support future students. The repayments would be tied to borrowers’ earnings, and the government says students in comparable circumstances would receive equal support and repay on the same terms as borrowers using conventional loans.
The option is expected to be available to non-Muslims as well as Muslims. Several British universities already list it as a potential source of student funding.
Braverman, now an MP and Reform U.K.’s education spokeswoman, called the plan divisive and said it would create parallel arrangements that she considers incompatible with British life. She also questioned who would bear the cost if borrowers failed to repay, arguing that taxpayers could ultimately be responsible.
Student loan debt is already substantial in England. A House of Commons Library report published in July said about £21 billion is lent to roughly 1.5 million higher-education students. By March, outstanding loans exceeded £295 billion. The government estimates that 55% of full-time undergraduates who began studying in the 2025–26 academic year will repay their loans in full.
A Department for Education spokesperson rejected the claim that the alternative arrangements would give Muslim students preferential treatment.
The government has not announced a firm launch date, but has indicated the scheme could begin in the 2026–27 academic year. Skills minister Jacqui Smith said in a parliamentary response on October 7 that work was continuing and that the product would be introduced as soon as possible after the Lifelong Learning Entitlement. She said its repayment requirements would mirror those for conventional student finance.
