With University season coming up, it is worth looking into Gardhu-ulhasssana when it comes to financing your education. Whereas typical loans usually incur lots of interest-heavy debt, Gardhu-ulhassana means a “goodly loan” and it is a loan which is returned at the end of the agreed-upon period without any profit or loss to the lending party. Note that the following is only a guide and it is up to each person to obtain their own funding.
Why should a loaner take part in a goodly loan?
A goodly loan is extra money that you would otherwise have sat in the bank, invested, or otherwise spent on non-essential items that can be put to use by helping someone in need. You will be taking part in strengthening the community by reducing the loan burden for our future leaders. Youth with less overwhelming interest debt are stronger leaders for tomorrow, and families are healthier when they are less focused on suffocating debt and more able to dedicate time and money to the betterment of themselves and their children.
The messenger of God, Mohammad, peace be upon him, is reported to have said:
“Whoever relieves a believer from a difficulty in this world, God will relieve him from his difficulty and will facilitate him in this world and the hereafter”.
(Ṣaḥīḥ Muslim 2699)
It is a very praised act of charity that is mentioned numerously in the Quran, the word of God, the Creator, to humans. In one verse God says, “Establish regular prayer, and give regular charity, and give God a goodly loan” (72:30). In another verse, God says “If you lend unto God a goodly loan, He will double it for you and forgive you” (64:17). You develop positive bonds in the community by supporting pioneering students of knowledge and the future leaders of the next generation, and you will inspire the people you help to provide goodly loans to others when they have the means.
Why should a borrower take part in a goodly loan?
By borrowing a goodly loan, you will reduce your debt burden and not be saddled with possibly up to 2 to 3 times the principal amount. Interest loans are considered, by some, to be a form of economic indentureship as it forms an unjust economic relationship between the wealthy donor and needy borrower. You will also avoid participating in the practice of interest which the Quran warns against. Instead, you will be focusing on financing your education in an interest-free approach and encouraging others to do the same. This will lead to a positive, reinforcing cycle of empowered borrowers who deal with manageable debt after finishing their studies.
Here is an example of a contract that one can use in recording a loan between two parties. The template is simple and consists of the amount being loaned, the intended date to pay back the loan, the stipulation of what the funds loaned are to be used for, and witnesses to the above.
Important information to provide that shows you are a serious student who will pay back his or her loan includes a transcript of recent grades, a detailed plan of how/when you intend to pay the loan back, a tuition schedule for the upcoming year, an acceptance letter into your program of study, and a CV (curriculum vitae).
*Below is a video that helps explain the process that is being described.
What are examples of organizations currently championing this approach?
A Continuous Charity is a non-profit organization run by Muslims in the United States of America. To date, they have financed $922,946 in loans to undergraduate and graduate students with $395,646 being repaid and re-loaned to other students.
The Islamic Society of North America serves as the US partner of the Islamic Development Bank’s Scholarship Program for Muslim Communities. This program has benefited over 9,000 students across the globe. It reimburses annual tuition fees up to $7,500, a monthly stipend of $500 a month for 12 months, and provides an allowance for books/materials up to $1,500. Repayments are set-up after graduation and go to a trust set-up in the United States with the goal of providing loans to successive generations of students.
As of December 2016, the Anjuman organization has loaned out approximately $1.82 million to 300 students pursuing undergraduate, graduate, and post-graduate degrees in educational institutions in the United States.
Jafari interest-free loans is a non-profit organization whose stated mission is to create a group of community members who pool their cash resources to provide interest-free loans to members to pay off their interest-bearing loans. JIFL is able to provide loans due to having individual members contribute a monthly contribution generally between $50-150. To date, they have loaned out over $700,000.
You can also obtain a goodly loan via sources other than non-profit organisations, for example, you can approach people in your family, friends list, and religious centers.