The U.K. government is set to introduce one of the world’s first state-supported student loan schemes compliant with Islamic law. Officials promise to pass “secondary legislation” for its implementation.
Most Muslims throughout history, and still to this day, are very happy to make use of interest in finance.
Students will no longer be required to pay interest on government loans under the new sharia-compliant finance system, which will provide funds to cover tuition fees and living costs, the Department of Education (DoE) announced on June 9, 2025.
“Some people feel unable to use existing student loans due to their faith. This is most common among some Muslims because their religion prohibits engagement with interest, which is applied to all student loans,” a statement on the DoE website explains.
The scheme, dubbed the Alternative Student Finance (ASF) provision, will follow the Islamic principle of Takaful—a sharia-compliant system in which money is pooled and invested. It will be offered to students in late 2026.
Students will submit “contributions” to a Takaful fund after completing their education. These “contributions,”—based on a student’s earnings—will fund future sharia-compliant student loans, the DoE noted.
The ASF provision will be certified by an Islamic Finance Supervisory Board (IFSB). The DoE has designated the U.K. Islamic Financial Council (UKFIC) to serve as the secretariat for the IFSB.
Agitators Linked to Promotion of Sharia Finance
The U.K. Islamic Financial Council serves as the secretariat to the All Party Parliamentary Group on Islamic and Ethical Finance, administered from the office of controversial MP Naz Shah, Focus on Western Islamism (FWI) reported in late 2024. In 2016, Shah apologized for a 2014 Facebook post in which she called for the relocation of Israel to North America.
Another controversial figure associated with the council is Umer Suleman. In addition to serving as a an advisory board member on the council, Suleman is also Chief Risk Officer for Wahed UK, a New York based sharia finance start-up endorsed by Deobandi cleric Mufti Ibrahim Menk, who once described gays as “worse than animals.”
Shah also supports The Muslim Vote (TMV) which, during the July 2024 general election, opposed Labour candidates who did not support calls for a ceasefire between Hamas and Israel after the October 7 massacre.
The new policy represents a victory for the Muslim Council of Britain (MCB), which has backed sharia finance since at least 2016. The same organization has has opposed a U.K. government ban on al-Qaeda, advocated veiling for Muslim girls, and boycotted Holocaust Memorial Day from 2001 to 2007.
U.K. Islamic Financial Council features an interview with M. Iqbal Asaria on its website, praising him as “one of the pioneers of Islamic finance both in the UK and around the world.” The International Institute for Counter-Terrorism named Asaria as the registered agent of the websites Jihad.org and Ummah.org, both associated with the Islamist Hizb ut Tahrir and Al Muhajiroun groups.
Government Sanctions Radical Interpretation of the Qur’an
“Why is the government facilitating special student loans to enable Muslims to follow a radical interpretation of the Qur’an?” asked Tim Dieppe, Islamic scholar and Head of Public Policy at Christian Concern a think tank in the U.K. “Most Muslims throughout history, and still to this day, are very happy to make use of interest in finance.”
“Shariah finance is deceptive since it still makes use of interest but deceptively disguises its use. Additional legal complexity is added to hide the deception. Moderate Muslims rightly object to this deception in finance,” Dieppe noted. “This will only serve to encourage more radicalization of Muslim students.”
Dieppe’s alert comes in the wake of a report published by the Forum for Foreign Relations titled “Radicalisation in UK Universities: Confronting Extremism at King’s College London and Beyond.” Universities “are still failing to understand, let alone seriously grapple with, the problem of radicalization of students,” due to “institutional denialism or naivety,” the report warned.
“Sharia finance is like communism: it sounds nice on paper, but when you try to put it in practice, it never works,” Duane Alexander Miller, an Islamic scholar and expert in aspects of Shariah law, told FWI.
“Politicians need to ask: where does sharia finance stop? Can you include inheritance laws whereby females receive an inferior inheritance to males? Do you incorporate business laws that don’t have corporately own companies?” Miller asked.
“The drive for the establishment of an interest-free Islamic economic system was started by Abul A’la Mawdudi, founder of the militant Pakistani Islamist Jama’at-i Islami movement,” writes Islamic scholar Patrick Sookhdeo in his book Understanding Shari’a Finance: The Muslim Challenge to Western Economics.
Several high-ranking muftis, including Muhammad Sayyid Tantawi, Nasr Farid Wassel, and Ali Gom‘a, as well as the Sunni Al-Azhar University, have issued fatwas asserting that predefined interest rates are lawful according to Shariah and do not count as usury, he noted.
“Sharia-compliant finance is, in effect, an economic jihad that succeeds in mobilizing Muslims who are not yet ready to participate in the fighting-type military jihad to share in jihad by other means,” Sookhdeo warned. “Furthermore, Islamists are not only creating a moral prohibition against all forms of conventional banking but also giving a directive for the use of punishment, even capital punishment, against offenders.”
Similarly, the U.S. Center for Security Policy has warned that sharia-compliant finance “is a Trojan Horse—an instrument for legitimating and propagating sharia in Western societies.”
Conservative Prime Minister Lays the Foundations for Shariah Finance
In 2014, Britain became the first non-Muslim country under the Conservative Prime Minister David Cameron to issue Sukuk (sharia-compliant bonds), selling £200 million of Sukuk to investors. A government report titled UK Excellence in Islamic Finance boasted that the initiative had “cemented the U.K.’s position as the western hub for Islamic finance.”
“The UK—and London in particular—has already become a center for Islamic finance. More than a dozen banks deliver Islamic finance transactions. There is hardly a large professional services firm that does not have specialist Islamic finance teams,” Cameron bragged.
Islamic finance in the U.K. moved from “an almost ‘no-go area’ to a ‘sought after issue’” within decades with former Prime Minister Gordon Brown stating in 2006 that the U.K. is well placed to become gateway of Islamic Finance in West, according to the paper “An Analysis of Islamic Banking and Finance in West: From Lagging to Leading.”
“The potential size of industry suggests that Islamic finance will continue to be a darling of the West for a long time to come,” the authors noted.
