Assalamu aleykum. We have a system of saving money through savings and credit cooperative societies (SACCO). certain amount is deducted each month from your salary (by your consent) and this amount becomes your share in the society. They provide loans of upto 3 times your share which you repay with an interest of 1% per month (12%per year). i am a member of a society although my intention is not to take loans but to save money as deductions are made at source. I am a graduate with a bachelors degree and working in government. In my work, i realize that a second degree (masters) is essential for progression and also it will help me find another better job easily with a good course. My salary is not enough to pay my tuition fees and i have other resposibilities to attend to with my pay. the government gives scholarships for furtheer studies but it is limited and i have tried many times in vain. The government has a Higher education loan services which it charges an interst of 12% p.a. I need to further my studies as i find the 1st course is not very marketable and also to help me in my career progression. Can I apply for a loan with interest from the SACCO or from the goverment to facilitate my masters studies? Please enlighten me on this topic of students loan to help me and others understand what is the islamic opinion on this. jazaakumullah.

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.

Your question included two points: The first point is about the savings and credit cooperative society which deducts part of the salary of the employee and offers loans with Riba (interest and/or usury) to the participants. The answer is that it is not permissible to deliberately participate in it as it invests the money of the participants on the basis of Riba.

The second point is about the ruling on students borrowing money with Riba from the cooperative society or from the government. The answer is that Riba is among the forbidden matters that are not permissible to do except in case of necessity or dire need and we have already issued Fataawa 87940 and 103791 clarifying the limit of the necessity (that makes what is unlawful permissible).

However, what you mentioned about your need to continue your studies in order to help you in your career progression or in order to enhance your academic ability is not a necessity that makes it lawful for you to practice Riba which is among the most severe prohibitions and one of the seven destructive sins, as confirmed in a Hadeeth.

The same thing applies to other students and other people: if they are really in case of necessity, it becomes permissible for them to commit what is forbidden to the extent that the case of necessity is removed and whoever is not really in necessity, it is not permissible for him to commit what is forbidden.

Finally, it should be noted that if a person fears Allaah, he will achieve his objectives; Allaah Says (what means): {… And whosoever fears Allaah and keeps his duty to Him, He will make a way for him to get out (from every difficulty). And He will provide him from (sources) he never could imagine.} [Quran 65:2-3].

Allaah Knows best.