The United Kingdom is preparing to launch a new student funding program designed especially for Muslim students. The “interest-free” Sharia student loan program is already being promoted to potential candidates by British universities, which might become accessible as early as next year, The Telegraph reported. Furthermore, the money won’t be deposited in the treasury and will be utilised for the benefit of other Muslim students.
However, taxpayers will ultimately bear the burden if the loans are not fully repaid. According to official projections, about half of student loans will encounter this issue.
The framework is based on Islamic law, which prohibits paying or receiving interest. The new approach is intended to increase the number of Muslim students who can enrol in higher education. However, the development is facing strong backlash and has been referred to as “anti-British,” which could lead to a “two-tier system” and deepen divisions.
“This outrageous anti-British scheme creates a two-tier education system and a divided society. The scheme from Labour proves they are addicted to double standards in all aspects of British life. Sharia loans are, by their very definition, exclusionary and for the benefit solely of Muslim students, thus creating parallel institutions that are incompatible with the British way of life. The whole idea is made even more farcical by the fact that the Treasury, and therefore British taxpayers, will have to foot the bill if they fail to pay,” charged British MP and Reform UK spokesperson Suella Braverman.
The government touted that the plan was among the first in the world and paid Islamic Finance Council UK over £365,000 in public funds to formulate it. The repayments would only be employed to subsidise others in the “Alternative Student Finance” program, which is primarily targeted at Muslim students, whereas interest from ordinary student loans flows back into the government’s main fund for the nation.
This year, a number of reforms to student financing will be implemented, including these loans. The media house unveiled that, according to the University of Bristol, which mentioned that the “interest-free UK Government loan” would adhere to Islamic finance standards and the University of Leeds, the loans might be accessible for the 2026-2027 academic year.
University College London and City St George’s have also confirmed that the loans are not going to be “interest-based,” while Newcastle University termed them as “non-interest-bearing” and “Sharia-compliant finance.” De Montfort University similarly conveyed that the loans are “certified as Sharia-compliant” for students “who can’t take out interest-bearing loans for religious reasons.”
The government stated in June 2025 that the program “doesn’t include interest” and was one of the world’s first state-backed Sharia loan programs, adding that Muslims students allegedly had ethical concerns about paying interest.
