Is it permissible for a Muslim student to benefit from an interest-free educational loan that converts into a grant upon passing the mid-term exam, and converts into an interest-bearing debt in case of failure, dropping out, or graduation, knowing that he does not need it and has the ability to repay it immediately in any case?

Loans granted for study fall into three categories: 1. Non-interest-bearing loan (Qard Hasan): It is permissible to take it if the student repays the exact amount borrowed without any increase. 2. Interest-bearing loan (Riba-based): It is not permissible to take it if the student is required to repay the loan with an increase. 3. Non-interest-bearing loan with an interest-based condition: It is not permissible to take it if the loan itself is originally non-interest-bearing, but includes an interest-based condition, such as repaying the loan with an increase in case of dropping out of study, failing, or delaying repayment. This applies even if the borrower intends to succeed or is confident of avoiding the interest payment, due to the implicit acknowledgment of the interest-based condition within the contract.

Accordingly, it is not permissible to take the aforementioned loan due to its inclusion of an interest-based condition.