Using interest to pay a usurious loan

31-1-2007 | IslamWeb


Salam, I owe $8500 in student loan and i have to pay 3.9% interest on it. I am trying my best to pay it off as soon as possible in next few months. I had some savings bond that I cashed after I learned I should not buy saving bonds. I received $1500 in interest. I would like to pay part of my student loan with this $1500. Is it wrong to use the $1500 interest money to pay another interest money to get rid of the student loan as soon as possible?or should I pay this amount of $1500 in charity(not expecting any rewards from Allah for it since it is Interest $$) and then continue paying the 8500 loan as soon as I can? Jazakallah


All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.


Borrowing money with interest is forbidden because it is Ribaa (interest or usury), and there is no difference between borrowing money for studies, investment or for any other purpose.

Whoever did so is obliged to repent to Allaah and be determined not to do that again. It is not a condition of repentance that a person should hasten to repay the loan which he borrowed with Ribaa, unless this will exempt him from paying the Ribaa, in such case one is obliged to hasten in order not to be the reason for others to gain Ribaa.

In case this does not make you exempted from paying the interests, then there is no need to hasten to repay the loan, because this benefits the person who consumes Ribaa, as by doing so, he quickly gets his capital money back as well as the Ribaa.

As regards the Ribaa you obtained by selling 'saving bonds', then you are obliged to get rid of them by spending them in the general interest of Muslims and you are not permitted to spend them for your own benefit, like in paying back your debts and the like.

For more benefit, please refer to Fatwa 83783.

Allaah Knows best.