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The question

What is the ruling on paying interest resulting from inflation, such as paying an amount equal to a borrowed sum after five years due to a change in value, and is it permissible to take out a student loan that includes inflation interest?

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Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 20261 min readAlso available in العربية
The answer

If you borrow a sum of money, it must be repaid in the same currency and value, even if its value has decreased. Paying an additional amount on the loan due to the depreciation of the currency is considered riba (usury). It is not permissible for someone who borrowed in one currency to agree to repay in another currency, because this is the sale of a present currency for another deferred currency, which falls under riba al-nasī'ah (usury of delay). Nevertheless, it is permissible to agree to repay the equivalent of the loan in another currency at the exchange rate on the day of repayment. Likewise, it is not permissible to take a loan with an inflation interest, because it is riba, and the Messenger of Allah, peace and blessings be upon him, cursed the one who consumes riba, the one who feeds it, its scribe, and its two witnesses.

Summarized from the full answer at Ftawy · imported

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Source platform
Ftawy
Original fatwa ID
19748
Imported
Translation status
Source text, unreviewed
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