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Fatwa CenterPrivate schools charging late fees for the delay in payment
Question
Salaam Alaikum My brothers are studying in International Indian School in Jeddah. I need to know the ruling on different kinds of fees charged by the school. The school charges late fees at the rate of 1 riyal for every day of default (for each child whose fees is not paid) after the last day of every month and there is no compromise in this regard. Now for Muslims is it allowed to give late fees to School when they (i.e. parents or guardians) fail to contribute money before the starting of next month because of some reason and as usual salaries are also acquired belated and so it is very hard to do all things in time. The school also provide personal accident coverage against the payment of 12 riyals as the annual premium payment for all students. Furthermore, tuition and bus fees are billed for 12 months in spite of the fact that more than 2 months go across without any transport need during summer vacation and other short holidays. By knowing this (i.e. school pattern), private vans has also started taking money for all the months even for summer holidays and we pay despite of its undeserving nature. In the light of Shariah law are all these types of fees permissible for us to give? I hope there is no essence of usury (i.e. Riba) in above mentioned charges. Jazaak ALLAHu Khair.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
With regard to the fees which the school imposes for the delay in payment, it is Riba (interest and/or usury) which is Islamically forbidden and it is not permissible to take it or to willingly pay it but if one is forced to pay it, and there is no way to avoid it, then the sin falls on the one who takes it and not on the one who pays it.
The same thing applies to the amount of insurance, if it is commercial and not cooperative, then it is forbidden and it is not permissible to willingly participate in it, but whoever is obliged to participate in it, then the sin is on whomever obliged him to do so.
As regards the bus fees and school expenses and the like, it is permissible to pay it in return for the services which are provided by the school or the bus drivers if there is an agreement on it even if the students do not use the buses except for a small period of time or even do not use them at all because what should be taken into account is just enabling the students of using the benefit and not actually using it.
To sum up, the fees that are agreed between both parties are permissible but the fine that is imposed in case of delay in payment is Riba and it is not permissible to pay it or approve it or sign a contract that includes it.
Allaah Knows best.
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