Fatwa #4716623 August 2022India
Referring students to acquire student loans
Question
As Salamalikum Wa Rahmatullah Mufti Saab,
Hope you are doing good.
I run one education management company and one aspect of my business include helping students with their admissions in top universities along with scholarships. Few students who won't get full scholarships will approach banks and other financial institutions for financial aids. We won't get deep into the aspect of bank loans and instead ask students to contact respective banks and Alhamdulillah we are safe of Interest and loans and May Allah protect us in this life.
Recently, a long processing company approached me and this company is a premium partner of some of the top banks. This company offered us a commission on every successful loan. Initially, I ignored the offer and didn't refered any candidate but later I got a thought of referring my students as they are going for a loan somehow or the other.
My view was that firstly my students won't get conned with high interest rate and secondly I will give the entire referral money to the needy without the intention of reward
My Question is:
- Is it okay to refer my students to this loan processing company
- Can I take the referral money from this loan processing company
- Is it okay to distribute this money to needy without the intention of reward
Jazakallah Khairun
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Brother in Islam,
It is pleasing to note your restraint from helping students acquire interest bearing loans. Your intentions are noble.
We understand from the query that you “tell students to contact respective banks” but you do not assist them in the process of acquiring an interest-bearing loan.
At the outset, you must understand that it is not permissible to encourage others to enter Haram transactions. It is very close to assisting in the sins of others and Allah Ta’ala says:
وَلَا تَعَاوَنُوا عَلَى الْإِثْمِ وَالْعُدْوَانِ (المائدة: 2)
Translation: “And do not assist in sin and malice.” (Al-Ma’idah: 2)
You may not be helping the student acquire the loan directly, but you are actively finding an institution that will give him a loan.
Therefore, it is impermissible to tell students to contact such banks in order to acquire an interest-bearing loan.
In light of the above, referring students to the long processing company will also be impermissible. The money that you receive from such a company will be unlawful and must be given away in Sadaqah to the needy without the intention of reward.
We advise you to make Taubah and Istighfar if you have previously asked and guided students to financial institutions from which they have acquired interest bearing loans.
And Allah Ta’āla Knows Best
Hasan Ahmed Razzak
Student – Darul Iftaa
Paterson, New Jersey, USA
Checked and Approved by,
Mufti Ebrahim Desai
(2021-02-03)