I want to start my degree but in order to start it I have to take out a tuition fee loan to cover the cost of the degree course. What happens is that the government pay on behalf of the applicant to the university (no money is handed over to the applicant, the government directly hands it over to the university).
Thereafter once the degree is completed then after a certain amount of years on the condition that the applicant is earning more than $15.000 a year the applicant will have to pay the government back in instalments every month. This is taken directly from the persons wages. A certain amount of interest is accrued which is called inflation.
My question was that is taking out such a loan permissible?
On the one hand the government is calling it a loan but based on the fact that they do not hand over any money to the applicant but give it directly to the university is it even considered a loan in Islamic Shariah? If it is not then would it be seen that the applicant when paying back the ‘loan’ is just paying the government for his fees whether that includes the interest or not?
And if it is considered a loan then if a person is certain that he will not earn that amount every year so in effect will not have to pay the loan back is it still permissible?