By Uzair Sarmast
After recently attending the Pure Paisa: Fiqh of Money & Transactions seminar at Qabeelat Durbah, I imparted some ideas about minimizing/eliminating interest in financing one’s education with the volunteers. Alḥamdulillāh, some people found it to be beneficial, so I am sharing it here on MuslimMatters, where I hope it will benefit others and serve as an impetus for further discussion.
Getting an interest-free education has always been and continues to be challenging, especially in light of increasing tuition costs. I just wanted to take a moment to share some of my thoughts that may help you (or your friends/children) get a quality education without compromising your values. And even if one feels interest is a necessity in getting an education, one can still make an effort to minimize it along with the overall costs of education.
My thoughts come from knowing a few people who have completed undergraduate studies and medical/dental school without dealing with interest, walhamdulillah.
I should also point out that I’m unable to provide a one-stop surefire solution (because currently there is none as far as I know), but rather just a few meager thoughts that might help. And by no means is anything guaranteed or easy; to the contrary I think being able to finance graduate studies without interest is the rare exception (and an immense blessing), rather than the rule. Undergraduate studies may be easier due to lower costs and greater availability of scholarships and financial aid.
PREPARE THE SOIL & PLANT THE SEEDS
Intention is emphasized in everything we do, and pursuing an education is no different. If one is absolutely committed to staying interest-free, then I think it’s paramount for the person to make an intention along the lines of: “If I can’t get this education interest-free, then I will delay it/won’t do it.” I believe such an intention (if serious & sincere; not just lip service) will bring Divine Help for the person.
Ask the only One Who Can Help You; the only One Who is Capable of all things; the only One Who Knows what is best for you.
With Allāh: A person may say “I want to enter such and such a profession so that I can earn money, and give it in charity to help others.” Put your money where your mouth is from the get go. If you are not charitable now (however little it may be), then how can you be entrusted to give in the future?
With People: People aren’t looking to lend money, especially large sums, to people who aren’t reliable: reliable enough to pay them back, as well as reliable enough to successfully complete their education and obtain quality employment.
Excel in School
Since many scholarships are based wholly or partially upon academic merit, if you don’t have the grades, then you may be severely limiting potential sources of funding. If you plan ahead, then you’ll appreciate the need to excel academically as early as high school and can hopefully lock in scholarships for your entire undergraduate education. If you’re already in college and haven’t received any scholarships thus far, then you can still do well now and apply for scholarships going forward since many scholarships are offered on a per-semester basis.
Community Service & Extracurricular Activities
In addition to academic performance, many scholarships take your contributions outside the classroom into consideration. Some organizations you can volunteer with offer their own scholarships. Furthermore, a friend or member of the community is more apt to help out someone who is a contributor to society.
Realize that staying interest-free isn’t going to be easy and you may have to sacrifice some things. For example, living in an apartment at an expensive out-of-state school might not be the most reasonable expectation (see “Living at Home” below)
Family & Friends: This is going to be a key (I’m inclined to say necessary) resource. Hopefully someone you know has been blessed with surplus wealth, and is willing to help you out. Ideally, you know someone who has wealth and holds the same beliefs as you. The limitation is that many practicing people think that interest for educational loans is not a problem. To find someone willing to help you avoid interest for school will be like finding a needle in a haystack. Don’t lose hope completely because the opportunity arises when someone who may not have an issue with interest personally, but respects you as a person and is willing to help you so that you don’t have to compromise your values. Or you might have someone who is involved with interest, but is regretful about it, and they may see it as an opportunity to attain the Mercy of Allāh
(“I have my shortcomings & regret them, so perhaps if I protect someone from interest, then hopefully Allāh will Protect me”).
For example, I know someone who was able to borrow $50,000 and another person was able to borrow $60,000 over the course of 4 years.
Organizations: There are a couple of charitable organizations that provide interest-free loans for undergraduate & graduates studies. You can search for them on the internet, and apply. Using this technique, someone I know received $50,000 over 4 years.
There are several scholarships that come in all different shapes and sizes based on field of study, financial need, ethnicity, academic merit, extracurricular involvement, etc. Most will require effort in terms of applications and essays, but remember that if you’re serious about avoiding interest, you’ll need to put in the effort. The great thing about scholarships is that you don’t need to pay them back. I know someone who got about $45,000 over 4 years for graduate studies, and several others who had 60-100% of their undergraduate tuition covered.
How to find scholarships
1. There are numerous books and websites which you can look up
2. Ask your parents to find out if their employer offers scholarships because many companies do
3. Find out if your town/county/state offers scholarships for your field of study, academic merit, or volunteer work
4. Check with local organizations (ie. Rotary Clubs) for scholarships
5. And of course, check with your school for what scholarships they have that you may potentially qualify for. If you’re a double-major, check with both departments for scholarships that may be uniquely offered for each major
Mountains are made of pebbles
While a scholarship for $500 or $2,000 may not seem like a lot compared to the total tuition, realize that receiving a few of these can add up quickly. Additionally, you will probably incur other expenses such a books, and equipment, so any amount of money you can get counts.
Buy used books (unless absolutely impossible). Email your professor before the class begins and find out what books are required; then search for used copies on campus or on the internet. Also find out if an older edition of the book will suffice. There is no need to pay out the nose to have a brand-new copy of the latest edition from the school bookstore if you don’t have to. Thus far, I think overall I’ve either broken even or made a profit on textbooks.
OTHER PRACTICAL TIPS
Live at Home
Attending an in-state public institution usually offers significant savings on tuition. Combine that with a school that is within commuting distance (save on rent, utilities, food), and now you’re talking major cost reductions.
Work During School
Depending on the difficulty and quantity of your coursework, a part-time job can be a very realistic option for many. Sure it’ll reduce the amount of time you can spend hanging out in the MSA lobby, but it’ll be a worthwhile sacrifice.
Evaluate the importance of your undergraduate program
Especially if you’re planning on pursuing graduate education.
For someone planning on attending medical school, my humble personal opinion is that going to a solid state school (ie. the equivalent of Rutgers in NJ) is an excellent choice. I don’t think going to a brand-name, private school adds much to your medical career because what is most important in the long-run is the quality of your residency and fellowship training (which depend upon your performance and activities in medical school) as well as other factors not related to where you received your undergraduate education.
Furthermore, getting into medical school isn’t so much about where you went for college, as it is how well you did there. There are plenty of people who went to an expensive college ($40-50k/year), but didn’t do well enough to get into a US medical school, so ended up going to an outside medical school (which is increasingly a major limiting factor for future career options). And even if someone from an expensive undergraduate institution does stay in the US for medical school, chances are they will be in the same school as you, taking the same classes and tests. So now it’s a level playing field and your future opportunities depend on your performance in medical school. The only difference is that they already have pre-existing loans of $200,000.
I am not diminishing the prestige or intangible benefits of attending an elite undergraduate institution; I am simply offering a practical suggestion to minimize costs of education which I believe in general does not detract from your future success in the grand scheme of things for a career in medicine.
Additionally, if you apply from high school, some state institutions have combined undergraduate-MD programs with local medical schools.
For those who may be pursuing a career in another field (ie. business), then it is possible that your undergraduate education may hold more weight because that will be your highest level of training when you apply for jobs (versus medicine where you have residency and fellowship beyond medical school, let alone undergrad). Even within the business field, this may vary depending on the specific field (ie. finance, accounting).
I have a friend who went to a state undergraduate institution and now works in a highly sought after position for top-notch financial firm. He told me that while he was able to “make it,” he had to put in much greater effort (working for practically free at times) to work his way up, in contrast to someone who came from a school with a better reputation in his field.
I have other friends who went to state schools for accounting and are now working for “big four” firms. They said these firms have internships and a history of hiring graduates of these schools so they were confident they would do well.
Utilizing Subsidized Loans
A subsidized loan is one for which you are not charged interest while you are in school.
In most cases, it is highly unlikely that someone will be able to earn enough while attending school full-time to pay off a subsidized loan to avoid the interest (unless you borrow a small amounts and/or will be earning a high salary).
Strategy 1 Use the subsidized loan to give you & your interest-free lenders (ie. friend) some buffer time. For example, if you start school in the year 2000, will graduate in 2004 and expect that it will take 5 years to be able to earn enough to pay back the loan (ie. by 2009):
A) You can borrow the $ from a friend in 2000 and have them wait until 2009 to get all of their money back. In this case, your friend’s money is locked up for 9 years (2000-2009)
B) You take a subsidized loan in 2000, then in 2004 you borrow money from a friend to pay off the subsidized loan within 6 months of graduating. Then you pay back the friend by 2009. In this case, your friend’s money is locked up for 5 years (2004-2009); this strategy reduces the time your friend’s money is locked up. The caveat is that you must be absolutely certain that you have a friend who will loan you the money when you graduate so you can pay off the subsidized loan; or else you will be unable to pay off the loan and will have to pay the interest.
Strategy 2 One brother mentioned that he went to school part-time and worked at the same time. Therefore, although he took 1.5 years longer to finish school, he was able to: A) Earn and save up money while going to school B) Delay his graduation so that he had more time until his subsidized loans became due. So when he did graduate, he had enough money to pay off the subsidized loan and avoid interest.
Unfortunately beginning July 2012, the government is no longer offering the $8,500/year in subsidized loans to graduate students, but I believe undergraduate will still be eligible. Confirm with FAFSA at the time you apply because policies are often changing.
Loan Repayment for Working on Under-served Areas
There are programs in medicine/dentistry/nursing where if you commit to doing primary care and working in under-served areas, the government will pay all or part of your loans. (http://www.hrsa.gov/
Job or Internship Tuition-Reimbursement
When considering potential job or internship opportunities, check if the company offers a tuition-reimbursement program. Many companies will wholly or partially reimburse you for further education, often with the stipulation that you commit to work for them for a certain number of years. I know a few people who have taken advantage of such programs for graduate business school. I also know two brothers who work for a college full-time (one in business, another as a police officer), and their graduate tuition (MPH, MBA) is free of charge. (Any full-time employee at this school is entitled to free education for their entire family; that is a pretty sweet deal!)
Take a Year “Off”, Save Up Money
“Off” doesn’t mean sitting at home watching TV or perpetually vacationing; rather what I’m referring to is taking time away from full-time school so that you can work in a setting that will improve your financial situation while simultaneously maintaining or even enhancing your qualifications for your ultimate career plans.
The part in italics is important because in the future you will be asked about what you did in your time away from school. You want to be able to provide an answer that demonstrates that the time away was an asset for you and your career. Hence the reason why spending a year watching TV probably isn’t a good idea (aside from the fact that you’re probably not saving up any money watching TV).
If you’re planning on a career in medicine, consider taking a year or two “off” in between undergrad and medical school so you can work and save up a decent chunk of change. $30,000 in savings will give you a nice cushion to help pay for tuition or other expenses when your other sources of funding (ie. friends) fall short. Don’t worry about “getting too old,” especially if you haven’t had any gaps in your education thus far. When you start medical school you’ll find that a good portion of people in your class are older than you because they’re coming from another career, took time to do research or for personal reasons. If you’re planning for a career in business, many graduate programs might actually prefer that you have work experience before getting further education because you will be better prepared to appreciate the real-world applicability of what you learn in the classroom. You can utilize this opportunity take advantage of tuition-reimbursement programs your employer may offer.
This was just a brief outline of some of my thoughts; by no means was this intended to be a comprehensive guide to financing your education or choosing your career. I hope that this article will encourage others to share their thoughts and experiences in the comments, so that we can learn different ideas from each other. You may have already known some of what was said, but I hope that hearing about people who have utilized these resources to earn significant sums in scholarships and interest-free loans, and go as far as completing medical school without paying interest will inspire you to put in the effort and seek out similar fruits (despite the tediousness of filling out application forms, writing essays, and the discomfort of having to ask people to borrow money). Perhaps you can use this outline as a checklist to go through and see if you’ve exhausted all possible resources. And I recognize that with increasing tuition rates, avoiding interest for even basic education has become very challenging, and unfortunately there isn’t any one, great solution that I’m aware of. So we put forth our best effort, and leave the rest to the Mercy of Allāh, as He [SWT] is Aware of our individual needs and situations.
Disclaimer: Please consult a religious scholar, career counselor, and financial expert before considering any of the above ideas. I am not liable in this world or in the Hereafter for any actions you do or do not take based upon the above thoughts.