Abstract:
Education loans were introduced in 1952 in Kenya under higher education loan fund
board (HELF). The number of applicants increased consequently causing problems
in provision of loans by the government; in this regard, the government introduced
Students Loans Scheme (USLS), which was governed by the Ministry of Education.
USLS noted problems in recovering matured loans from the beneficiary. To deal with
this problem, in July 1995 the Government of Kenya through Parliament established
the Higher Education Loans Board (HELB) to control the Student Loans Scheme.
However, due to financial constraints, education loans do not cater for students
studying abroad and those on self-sponsored programs. The scheme contains the
element of interest which makes the product non sharia compliant, this is the
research problem. Therefore, there is a need to seek an Islamic alternative model
based on Islamic sharia. The research methodology to be applied in this study is the
inductive and descriptive analysis methods. The Islamic alternative model are
expected to help Muslims students to finance their higher education without
destroying their faith, likewise HELB will continue funding education loan without
hardship thus promoting financial system development and investment in human
capital.
