Some UK Universities Promote ‘Interest-Free’ Sharia Loans

November 11, 2026

Six UK universities tell Muslim students that sharia-compliant loans could start in 2026-27, while critics warn of a two-tier system.

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Six UK universities are promoting “interest-free” sharia student loans to Muslim students. The loans could start in 2026-27, but the Department for Education (DfE) has not given a date.

Islamic law bans paying or receiving interest. The scheme aims to help more Muslim students go to university, and any student can apply.

How the loans work

Students repay the same amount as on a regular loan, on the same dates. Instead of interest, they pay an equivalent “contribution”.

That money is ring-fenced for others on the Alternative Student Finance scheme, which is aimed mainly at Muslim students. It does not go to the Treasury.

Taxpayers still cover any unpaid balance. The Government paid Islamic Finance Council UK more than £365,000 to design the scheme.

Universities promoting the loans

Bristol, Leeds, University College London, City St George’s, Newcastle and De Montfort describe the loans to applicants. Bristol calls it an “interest-free UK Government loan”.

UCL and City St George’s say the loans “would not be interest-based”.

Criticism and DfE response

Suella Braverman, the Reform spokesman for education, said: “This outrageous anti-British scheme creates a two-tier education system and divided society.”

A DfE spokesman said it would be “completely false to assert that Alternative Student Finance arrangements would give favourable treatment to Muslim students.” He added that all graduates will repay their loans in full.

A 2021 Muslim Census survey of nearly 39,000 British Muslims found that 80 per cent of students “feel conflicted” by regular loans.