A new system of “Sharia-compliant” student loans is to be launched to allow more Muslim students to go to university, it has been announced.

David Willetts, the Universities Minister, said an alternative financial model was being created to satisfy Islamic law that forbids Muslims taking out loans that make interest.

Under the system, students would apply for taxpayer-backed loans but repay them into a mutual-style fund that would be ring-fenced to provide future finance to other students with the same religious beliefs.

The move will raise concerns over a two-tier system in which Muslim students pay less than other undergraduates.

But the Government insisted it would be set up in a way that ensured repayments were made at the same rate as students who take out traditional student loans.

It comes just weeks after it emerged that Sharia law was to be effectively enshrined in the British legal system for the first time under new guidelines for solicitors for Islamic wills.

Around 115,000 Muslim students currently attend universities in the UK but it is claimed that many have been put off a degree by the Coalition’s new loans system – introduced in 2012 – that carry a real rate of interest above inflation. It coincided with a near tripling of the cap on tuition fees to almost £9,000.

Omar Ali, president of the Federation of Student Islamic Societies, told the Telegraph: “We know of many students who finished college but decided not to go to university because of the way the new system was set up. We welcome this proposal.”

via Plan for ‘Sharia-compliant’ student loans to get more Muslims into university – Telegraph.