Bismillah.

There is a lengthy series on personal financing (financing your education in a halal fashion) on Muslim Matters. It’s quite interesting to read.

There is a bit of a discussion first of all about whether it’s really even necessary to go to college or university. Well, I won’t debate that, but let me at least give you the real cost of education. In economics they call this “opportunity cost”. When you go to university for 3 or 4 years, that means you are losing that income. Say an entry level job with absolutely no post-highschool diploma education you can make $30,000 to $40,000. For the sake of argument, lets say you are more competent and you can get a decent job at $40,000 (say telemarketing, sales, construction, or whatever). You have to factor this into the cost of your education.

So really your education comes at a cost of 4 years of lost income or $160,000. Now, from a strictly financial perspective, you have to ask yourself, am I going to make up that $160,000 over my lifetime because I have a degree? That is a long discussion and I won’t get into it. But to summarize, it depends and that’s what you need to think about.

Lets say you have now decided you want to go to university. Great. But how to finance it.. ?? ??

1. First of all you have to realize the seriousness of riba. Interest (paying it or receiving it) is one form of riba. So thats the first step.
2. Second of all, you have to make sincere intention to avoid it at any costs and try your utmost to do this.
3. This might require a lot of personal sacrifice. This starts with living frugally (i.e. living simple. No expensive cell phones, avoid eating out, try to get stuff used instead of brand new, and so on)
4. Enrol in a CO-OP program (such as University of Waterloo Computer Science), and be practical about which programs lead to $$$. This might sound harsh but it’s good advice from a good brother and friend of mine. Alternatively you work part-time in the evenings or on weekends.
5. Lastly, place your trust in Allah. After you did all that, you place your trust in Allah and leave it to him 🙂

Now lets say you did all of the above (or maybe its too late and you are about to graduate) and you need to pay off your loan without paying interest? Well if you have either personal loans from family members or friends and they are not interest bearing, great, this doesn’t apply to you. Otherwise, here is what you can do.

As a background note, before I explain, I live in Canada and received OSAP (Ontario Student Assistance Program which is basically an interest-free loan for the duration of your studies) but as soon as you graduate interest starts accumulating immediately. Update: Someone emailed me to ask if this is halal. I don’t think its halal to sign such a contract, please read the muslimmatters blog for a similar explanation about credit cards and why it’s best to avoid them.

How I personally avoided interest on my entire loan.

1. Gather a list of all your friends and family members who might be able to help you with your loan. Be creative, your list should include the imam of the masjid you attend, the sheikh teaching the last seminar you attended, and so on.
2. Contact them and ask them for assistance. Mention to them that you are in a difficult situation, maybe they were also in a similar situation and needed help. One brother who gave me some money as a loan mentioned that he was also in a similar situation and someone helped him, so he told himself that if ever someone asks him for help with student loans he will give him the money for that. The easiest way is to email them and ask them. I would recommend a personal email. Here is a draft:
   

   Dear So and So
   Assalam alaikum wa rahmatullah
   I am in the final year of my university program at UofXYZ.
   I am about to graduate and land my first job inshaAllah. The program I have studied in has given me an excellent background in this field and I feel confident about landing my first job shortly. I hope you can assist me so that I can avoid paying interest on my loans. I am looking for a 2-4 year loan that will be paid back entirely at the end of the term or sooner if required. JazakAllahu Khaira.
   Your name

   As an exercise, you can look up a few hadith and ayah on the reward of lending loans and the seriousness of riba.

By the way, It helps if you already have a job offer. It also helps if you are well known in the community (i.e. go to the masjid regularly, and so on).

Here is how it worked out for me.

• An older brother (doctor) lent me $1000
• A university friend (graduated before me) $500
• My paternal uncle $1500
• A close friend who was graduated and working $500
• Another friend who lived with me at one time and graduated before me $2500
• My brother undisclosed amount 😉
• A brother who I only knew online but emailed him for help (lived in USA) $1000
• Another brother whom I only met once before in the masjid – approximately $29000

Now you might be wondering why someone I met only once would lend me so much money? The simple reason is for the sake of Allah. He obviously did some reference checks on me from friends and others. The funny thing is I just asked him for $1000 but due to some circumstance I mentioned that I actually needed more and then he offered to lend me whatever was remaining (asked me to pay him back within 2 years if possible).

The surprising thing is that people I thought who had money didn’t, and where I least expected it, thats where it came from.

As a last note, if you are trying your best but not succeeding, keep in mind, its the effort that counts, not the result. Effort from you, results from Allah. Now sleep soundly knowing that you did whatever you could to please Allah.

Rejoice!
(listen)