There is no minor Riba
4-10-2003 | IslamWeb
Question:
In order to finance my studies I have - in order to fundamentally sustain myself - to take a student loan. No I know, of course, that Riba is Haram. But I also know this is to protect the Muslims against themselves, and in order to prevent Muslims form exploiting each other. Now this student loan - taken here from a government agency in the Netherlands - is a so-called 'soft loan'. This means firstly, the interest is low, and there are some certainties put in place in preventing you from going financially under, such as: (1) Pay-back is calculated on the basis of your annual income - if this income is too low, you don't need to pay anything (2) and if after ten years after your study you can't fully sustain yourself financially, the loan is converted into a 'gift'. Are these certainties enough to give me the right to take up this deal, or is it when it comes to interest always Haram - no matter how well protected you are in the contract?
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.
Knowledge is of two kinds:
The first is what is compulsory on the Muslim to know as an individual. This includes rulings concerning his Salah (prayer), Saum (fasting), Hajj (pilgrimage), Zakah and the transactions which he needs in his dealings. If the person cannot learn this except with a Riba (interest and/or usury) loan, then it is lawful for him/her to take this loan as remaining ignorant of such rulings causes destruction for the Muslim in this mundane life and the Hereafter.
The second type of knowledge is what is not obligatory on the individual Muslim to know. This includes any lawful matter or communal obligation regardless of whether this knowledge is from the Sharee’ah or other subjects. However, it is unlawful to learn this knowledge using unlawful earnings because getting this knowledge is not a necessity that makes Riba lawful. So, it is unlawful for you to take a Riba loan for your study if what you will study is from the second category. On the other hand, low interest rates do not change the ruling as Riba is forbidden regardless of its being small or large. Also, the ruling is the same if the debt is removed because of bankruptcy or inability to pay as the contract is forbidden from the beginning.
Allaah Knows best.