Question to the Department for Education:

To ask the Secretary of State for Education, whether a sharia-compliant alternative student finance system will be available for people beginning university courses in September 2018.

We understand the concern that some prospective students may be deterred from pursuing higher education because they are unable to use loans that bear interest.

We are therefore continuing to work on an alternative student finance product that would avoid using interest. We have appointed specialist advisors from the Islamic Finance Council to help design a new system that can make maintenance and tuition fee payments and collect repayment contributions in a way that is both equivalent to the current system and compliant with the requirements of Islamic finance.

This a complex area requiring careful consideration of a range of technical issues, including the nature of the accounting for the new arrangements, the degree of legal separation required for any fund, the treatment of cashflows, the nature of the commitments that a student will make under the new system, and the method for establishing equivalence of outcome, amongst others.

This work is being undertaken at pace and we will be in a good place to provide an update in the summer. I will set out our planned timetable at that time. I note that it typically takes two years to introduce a new student finance product, which would rule out launching for academic year 2018/19.