The Minister of Islamic Affairs, Dr. Mohamed Shaheem Ali Saeed, has lauded the President’s recent decision to eliminate the administrative fee attached to student loans, calling it a historically righteous and just move that aligns with Islamic Sharia principles.
In his statement, Dr. Shaheem explained that the President’s decision to remove the administrative fee and make the student loans fully compliant with Sharia has faced some criticism, primarily due to confusion regarding the distinction between the administrative fee and the service charge permitted under Islamic law.
Dr. Shaheem clarified that according to Islamic Sharia, it is prohibited to impose any additional amount on a loan as a condition for repayment. While charging a fixed, actual service fee for administrative work is permissible, it must be strictly limited to the rightful costs associated with processing the loan.
In the Maldives, the current practice of charging a percentage (1%) of the loan amount as an administrative fee, regardless of the loan’s size, was identified by the Minister as a form of usury, or *riba*, which is not compliant with Islamic principles. The President’s decision, therefore, aims to ensure that student loans operate under the framework of *Qard Hasan* (a benevolent loan), completely free from interest or any form of usury.
Dr. Shaheem emphasized that government employees who handle the administrative aspects of student loans are already salaried, and the processes involved are part of the existing state administrative system. As such, there is no need to charge students additional fees. The Minister also highlighted that providing education to students is viewed as a fundamental investment by the state, with the government’s role as the guardian of the students' welfare.
The Minister concluded by reaffirming that the President’s decision adheres to both local and international Islamic financial principles, ensuring that student loans remain fair, just, and in line with Sharia teachings.
