Islamic Faith Prevents Paying Interest on Student Loans?

My religion does not allow me to pay taxes, interest, dues, fee, etc.. Nice try, right?

Well SOMEONE had to try this in a question to the Huffington Post:

Question:

Dear Steve,

I had two citi-student loans and at some point in time within the last 5 years they went to Navient (Sallie Mae)

I recently called to ask if I could get a lower pay-off amount as the original loans were 32K and now they are up to about 64K because of deferment and interest. They said no and I believe these may have been private loans.

My conditions have changed. I was born into Islam, but never knew much about my religion. Since 2012 I have been learning more about my faith and it is strictly forbidden in my faith to have dealings with interest.

I am offering to pay off the original amount I owe however due to religious reasons would like them to recognize that my awareness and conditions have changed from the time of originally accepting the loan with Citi-Student Loan Corp and not even with them at Sallie Mae.

Can I get the interest wiped out and close this account and case with just paying the original amount borrowed?

I am in the Seattle, WA area are there attorneys that you can direct me to that can help?

Amir

Can you guess the answer?

Answer:

Dear Amir,

Yes, I am very familiar with the issues surrounding the Islamic approach to interest. You might enjoy reading Debt & Religion: A Look at the Islamic View of Debt With Imam Asal.

Asking any lender to adjust their terms and conditions after the fact for religious reasons is just not going to happen.

You've also learned a painful lesson, the damage caused by deferment is enormous. Most people think it is an innocent time not to make payments and get a payment vacation. In fact it just puts the debt in turbo and the interest causes the balances to explode.

The next issue is if you will have the money on hand to settle. You'll need to either need to payoff the settlement in one payment or three or four.

If you don't have funds available to do that then you might want to talk to your mosque about Zakat, "a muslim charitable fund that followers may ask for help from in order to repay problem debt. Zakat is a obligatory charity for Muslim followers." - Source

But even considering all those facts above, if your faith is guiding your repayment then you'll have to seek wise counsel on how to deal with what the the Imam told me. He said, even those that borrowed with interest, are obligated to repay their entire debt and if they don't they will prohibited from entering paradise when they die.

How you overcome that little issue is above my pay grade.

If only we could all wipe clean our interest owed, taxes owed, fees owed....due to our newly founded religious beliefs.

Source

Maybe he would be more interested in becoming an ultra-orthodox Jew? They were supposed to live in 7-year cycles where on the 7th all debts were supposed to be forgiven. This is supposed to be that year, btw. The idea, of course, was that you should not lend out or take on a debt you could not make good on in 7 years, and if something happened that prevented you from doing so, you should not be penalized for it.

a reply to: Ultralight


What surprises me, is most collection units do sometimes try to give a smaller amount for you to pay, and sometimes it is near, or at, the amount you borrowed, depending on how long it's been. I wonder if this hasn't already been done with him/her, and if so, why s/he didn't take the offer? Religious pride? If so the amount would have been small enough s/he would have been able to enter his/her heaven.

I say this because my 10k is up to 30k and the offers have been made to me, but I'm severely disabled and not working and now they're threatening to go after my SSI.

a reply to: Anyafaj

Really? We've never had that offer.

All they do is offer us the "income sensitive option." It's a real winner. You go from affordable to payments that basically assume you would be getting a near 100% income boost within the next 6 months. Every time we offered to pay them what we could, even just pay off the interest, they would offer us that, and then when we turned that down because it's insane, they'd put us back on deferment or the full amount of payment.

originally posted by: ketsuko
a reply to: Anyafaj

Really? We've never had that offer.

All they do is offer us the "income sensitive option." It's a real winner. You go from affordable to payments that basically assume you would be getting a near 100% income boost within the next 6 months. Every time we offered to pay them what we could, even just pay off the interest, they would offer us that, and then when we turned that down because it's insane, they'd put us back on deferment or the full amount of payment.

Yeah, it's been about ten years since a company made such an offer. Now it's all MONEY MONEY MONEY, but back in the day, they used to try and work with you. Now the interest rate is so usury, you'll never get out of debt. Especially if you're like me, can't work ever again and you're idiot doctor refuses to get on the bad side of the government and fill out the forms. I've had 3 doctors refuse to fill out the forms "because we're afraid of the government taking away our medical license". So in other words the disabled are screwed over regardless.

This reminded me of the spider drawing to get out of a bill payment story
www.techradar.com...

a reply to: FlySolo
That is a funny one, I never saw it before.

a reply to: Anyafaj

That's cause the government took them over -- government has two modes, lube or no lube.

Mine were held through a private CU, and they worked with us every step of the way. My husband got shafted on that end of the stick.

But somehow the faith doesn't prevent these folks from taking the money in the first place. How convenient! Nice work if you can get it.

a reply to: Ultralight

If there was a greed reduction and the loaners would accept the original amount owed without interest, PLUS a fee, they'd not only get a lot of income from it, they'd make a small profit, and the debtors would be free to pursue greater monetary goals in life.

Instead, they hike interest, in the knowledge (hopefully) that many will never repay.

I don't know, I'd rather get something with a small gain than nothing at all. Especially if the future livelihood of hundreds of thousands or even millions of debtors was at stake. It would create more future business in several areas.

originally posted by: r0xor
a reply to: Ultralight

If there was a greed reduction and the loaners would accept the original amount owed without interest, PLUS a fee, they'd not only get a lot of income from it, they'd make a small profit, and the debtors would be free to pursue greater monetary goals in life.

Instead, they hike interest, in the knowledge (hopefully) that many will never repay.

I don't know, I'd rather get something with a small gain than nothing at all. Especially if the future livelihood of hundreds of thousands or even millions of debtors was at stake. It would create more future business in several areas.

The interest rates are close to 30% if not higher at times, not to mention, the fees these places collect. And they're constantly switching collection agencies to continually jack the fees up and up and up and up, so you never have any hope of being able to pay it. And they want it all at once most of the time. A good many of these will not work with you and being disabled means crap nowadays, they tell you to get your doctor to file, and your doctor says, "I'm sorry, I don't want to lose my license. I can't fill that out." So you might as well just grab your ankles and take it. Trust me, I've been taking it since 1993. I was paying until 1993 when I became severely disabled and couldn't work anymore. Social security told me I didn't qualify for SSDI, so I filed for SSI. Now, after 8 years, I'm finding out SS may have lied to me and I could qualify for both. Oh how I love the government.

Cant blame him for trying, it was worth a shot.

To be fair his reason for thinking he shouldnt pay makes about as much sense as the bank thinking they are owed it, I mean its not like they actually had the money in the first place.

a reply to: r0xor

She signed a variable interest loan contract and tried to used religion to get out of the interest. She has nerve!

originally posted by: Ultralight
My religion does not allow me to pay taxes, interest, dues, fee, etc.. Nice try, right?

Well SOMEONE had to try this in a question to the Huffington Post:

Question:

Dear Steve,

I had two citi-student loans and at some point in time within the last 5 years they went to Navient (Sallie Mae)

I recently called to ask if I could get a lower pay-off amount as the original loans were 32K and now they are up to about 64K because of deferment and interest. They said no and I believe these may have been private loans.

My conditions have changed. I was born into Islam, but never knew much about my religion. Since 2012 I have been learning more about my faith and it is strictly forbidden in my faith to have dealings with interest.

I am offering to pay off the original amount I owe however due to religious reasons would like them to recognize that my awareness and conditions have changed from the time of originally accepting the loan with Citi-Student Loan Corp and not even with them at Sallie Mae.

Can I get the interest wiped out and close this account and case with just paying the original amount borrowed?

I am in the Seattle, WA area are there attorneys that you can direct me to that can help?

Amir

Can you guess the answer?

Answer:

Dear Amir,

Yes, I am very familiar with the issues surrounding the Islamic approach to interest. You might enjoy reading Debt & Religion: A Look at the Islamic View of Debt With Imam Asal.

Asking any lender to adjust their terms and conditions after the fact for religious reasons is just not going to happen.

You've also learned a painful lesson, the damage caused by deferment is enormous. Most people think it is an innocent time not to make payments and get a payment vacation. In fact it just puts the debt in turbo and the interest causes the balances to explode.

The next issue is if you will have the money on hand to settle. You'll need to either need to payoff the settlement in one payment or three or four.

If you don't have funds available to do that then you might want to talk to your mosque about Zakat, "a muslim charitable fund that followers may ask for help from in order to repay problem debt. Zakat is a obligatory charity for Muslim followers." - Source

But even considering all those facts above, if your faith is guiding your repayment then you'll have to seek wise counsel on how to deal with what the the Imam told me. He said, even those that borrowed with interest, are obligated to repay their entire debt and if they don't they will prohibited from entering paradise when they die.

How you overcome that little issue is above my pay grade.

If only we could all wipe clean our interest owed, taxes owed, fees owed....due to our newly founded religious beliefs.

Source

I love how STEVE answered it with Islamic sources.

The only way I could get out of student loans was because I have a disability that prevents me from working, ever again. But in order to prove it, I had to have three doctors fill the forms and prove by my medical records. I also had to promise never to go back to college.

I have enough credits for my Bachelor's degree and can't even get it because the disability prevents me from even obtaining that. I have the same credits and education as most people graduating from college, but through circumstance and disability, was prevented from getting it.

Amir is going to have to pay, but nice try anyway.

Whatever the original intentions of this thread, it brings up an interesting point- the absolute and total uninterest in actual higher education in the US. The entire thing has turned solely into a for-profit venture.
But that's endemic of a larger issue- it isn't just education that is like that. EVERYTHING is like that.

For example, I am a little more careful in how I pay for stuff, just so as not to be able to pay interest, but such an existence is incredibly difficult in the US due to their obsession with credit and interest. I remember I had to get a credit card, which I never used, and make payments for that, just so as to be able to get a credit rating so I could buy stuff.

Islamic finance is a pretty complicated thing, I myself don't understand it properly either, but I was never all that good with finances anyhow. There are some instances when paying back more than the original loan amount is allowed, and isn't referred to as interest, instead, it is sort of a prior agreement that a certain amount over the required amount would be paid, and that is fixed.

So many things with the world could be fixed if we could move away from the interest and credit model, but I very much doubt any such thing will happen in my lifetime. Money is too powerful a motivation.