Sharia-compliant Student Finance

Baroness Swinburne Excerpts

Wednesday 13th November 2024 Lords Chamber

[Baroness Smith of Malvern (Lab)]

The noble Lord makes a very important point. Perhaps I was not clear enough in response to his noble friend. Part of the work that we are doing is to engage with the Muslim community, firstly to ensure that the plans the Government are putting in place will be sharia-complaint and acceptable to the community, and also to ensure that the message about the ability to take up this student support in order to be able to undertake higher education is properly communicated. We are absolutely committed to continuing with that engagement, including with Islamic finance specialists.

[Baroness Swinburne (Con)]

My Lords, can I ask the Minister what the Government will be able to do to help prospective and existing students understand what their loan commitments mean for them? I have had recent experience with my own children and their friends, who had no idea what they signed up to several years ago.

[Baroness Smith of Malvern (Lab)]

I think the Student Loans Company works quite hard in order to ensure that students understand the commitments that they are taking on with student loan finance. But it is a fair point that it is important not just for the Government but for higher education institutions to be clear with students about what they are getting for their money, and then for us and the Student Loans Company to be clear with students about the impact later on in their life of the loans they are taking out.

I will reiterate the point I made earlier that sometimes there is confusion among students, who think that student debt is similar to other forms of debt, when clearly it is very different. Repayment is linked to earnings levels and, at the end of the term, any remaining debt will be written off. I try to say that as frequently as possible. It is a fair challenge that we should ensure that as many students as possible understand that that is the situation with student debt.