Student Loan Riba Trap Visualizer
See the reality of Plan 2 Loans. Will you pay off the debt, or just service the interest for 30 years?
The Riba Trap
Visualizing Plan 2 Student Loans
Note: Most students will never clear the debt. This calculator shows how payments effectively become a graduate tax that mostly services interest (Riba).
Debt vs Total Paid (30 Years)
Red Line: Loan Balance (Debt) • Blue Line: Cumulative Money Paid
The Mathematical Impossibility
For many graduates, the interest rate (RPI + 3%) often outpaces their repayments.
- The Spiral: If your debt is £50k and interest is 6% (£3k/year), but you only pay £1k/year (salary £38k), your debt grows by £2k every year.
- The Result: You pay every month for 30 years, but never touch the capital. You are effectively paying a "Riba Tax" for life.
Is it Haram?
Majority View: Yes. It is a contract stipulating an increase (Riba) on a loan. The fact that it is collected via HMRC doesn't change the underlying contract.
Minority View (e.g. Sh. Haitham al-Haddad): Some argue the necessity (Darura) of education in the West might create a concession, or frame it as a sui generis tax, but this is contested.
Why is student loan interest considered Riba?
Riba is any excess payment over the principal loan amount. Plan 2 loans charge RPI + up to 3% interest, which is a contractual increase on debt, satisfying the definition of Riba, regardless of whether you call it a 'tax'.
Is it a loan or a tax?
While it works like a tax (9% of salary), it is structured as a debt contract with compounding interest. This structure is what makes it Islamically problematic for many, unlike a pure graduate tax.
What if I never pay it off?
The debt is written off after 30 years (or 40 for Plan 5). However, during those 30 years, you are actively paying Riba. The fact that the capital is forgiven later doesn't negate the Riba paid in the meantime.