Registered Education Saving Plans: Permissible?
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Registered Education Saving Plans: Permissible?



Reply Date

Nov 16, 2018


In Canada, the government offers what's called RESP or Registered Education Saving Plan, where you can save money for your children’s education. For the money you save, you get a tax break plus the government contributes 20 percent of the money you save every month, up to a defined maximum. Of course, you will be getting return for saving this money over the years in the trust company. What should I check with the trust company to make sure the return I'm getting is halal?



Registered Education Saving Plans

In the Name of Allah, Most Gracious, Most Merciful. 

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

In this fatwa:

Registered Education Saving Plans, especially those done with conventional financial institutions, are interest-based. That is why one is advised to resort to Islamic Housing Cooperatives that are qualified for the RESP.

In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Most kinds of return on such plans with conventional financial institutions are interest-based. If you take such a plan (on interest) you have to give to a Muslim charity all accumulated interest over time and keep only your contributions as well as the government matching contributions.

However, to the best of my knowledge, the Islamic Housing Cooperative of Canada (housed in Mississauga, Ontario) is registered and qualified for this RESP, and if you deposit with it, its return is lucrative and almost guaranteed because it only invests in helping Muslims get houses.

You may also check with the Royal Bank of Canada (or maybe in Montreal, I am not sure about the name) because it announced the issuance of an investment plan that is Shari`ah compatible. See if it accepts this RESP.

 Almighty Allah knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.

About Prof. Dr. Monzer Kahf

Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey

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