Halal Money Matters Podcast

Episode 21 - Paying For College Interest Free with Abdullah Syed

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Narrator:
The thoughts and opinions expressed on Halal Money Matters do not necessarily reflect the views of Saturna Capital, Amana Mutual Funds, or their affiliates.

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Monem Salam:
Welcome to Halal Money Matters. I’m Monem Salam. And today we have a special guest with us, as a host. His name is Scott St. Clair. Hey, Scott.

Scott St. Clair:
Hey, Monem. How are you? 

Monem Salam:
Good. How are you doing?

Scott St. Clair:
Not too bad. 

Monem Salam:
You want to give a brief introduction to yourself?

Scott St. Clair:
Yeah. I work here at Saturna Capital in the fund accounting department, and I’m excited to get in my first episode of Halal Money Matters.

Monem Salam:
So not to get too much into the fund accounting, but what does that really mean?

Scott St. Clair:
Basically, I help manage the background of all of the funds, all of the transactions, all the subscriptions, the redemptions going on in the background. I work all the gears that grind in the background.

Monem Salam:
So when when the NAV was up or down, you're the one who's calculating that.

Scott St. Clair:
Exactly. I’m the one who tells you if it went up or down. 

Monem Salam:
That's great. The one word in this particular episode, we're talking about college education, those type of things. And NAVs matter for those investments. So the guest we have is Abdullah Syed. He is the executive director of A Continuous Charity. A Continuous Charity basically provides interest free loans for college students. And this topic is really interesting because I get a lot of people asking about how do they fund their college education with scholarships without taking out any loans and those things. So I think this will be a great conversation to have. Scott, I know you've been in college as well, and so what what was your experience?

Scott St. Clair:
Quite recently, actually. I'm really interested to hear what he has to say because when I was applying to colleges, I really only saw two paths. You have to take out interest bearing loans or you have to have wealthy enough family or parents to just pay for it upfront. So I’m really curious to see what he has to say.

Monem Salam:
Well, let's get started then.

Scott St. Clair:
Let's do it.

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Monem Salam:
Abdullah, welcome to the show. It’s really an honor to have you here.

Abdullah Syed:
Well, thank you, Monem, Scott, and Saturna Capital for having me here today. Really appreciate it.

Monem Salam:
I’ve known you for a long time, and this is a good point in our time to be able to talk about college funding and scholarships and those type of things. I know for myself, my daughter is eagerly awaiting to decide where she wants to go to school. And part of that has to do with what colleges are offering her as far as either scholarships or grants or those type of things.

For all of my kids, I’ve told them from the very beginning, like whatever loans that show up on their FAFSA forms, we’re not going to accept them. So don’t even look at that as a potential for that. And I’m sure there’s a lot of people that have the same things in mind.

Abdullah Syed:
Absolutely. You’ll be surprised that we hear from students all the time. You know, I signed this form. I didn’t know what subsidized versus unsubsidized loan was. I didn’t know this was a loan versus this was a grant. It all comes in one letter. The package that FAFSA gives you, right? And you’re like, yeah, I got this like $80,000, but it’s just like $2,000 of grant and $78,000 of loan. And part of it is subsidized, which means, it’s due six months after undergraduate degree. And for most graduate programs, there is no subsidized loan. An unsubsidized means there’s interest piling and snowballing the day you get that loan.

Monem Salam:
Yeah. And it’s crazy. And that’s probably one of the reasons why there’s so much of a debt crisis for student loans in America. People really don’t know what they’re signing up for. So let’s get started. I mean, I think that the first part of it is kind of breaking that down, right? So here’s what I’ve realized a little bit from my experience of going through multiple kids, you know, applying for colleges and those type of things.

One of the overall things that I found is that if you’re really wealthy, then you can probably afford college. If you’re really poor, you can afford college, you’re going to get the grants and scholarships, need based scholarships, those type of things. But there’s a huge middle class that basically can’t afford it. And so and it’s not it’s not cheap. Colleges are very expensive. And so, you know, maybe we can start there and you can talk a little bit about what your experience has been with how, let’s say, the middle class actually funds their colleges.

Abdullah Syed:
I totally agree with you. At the same time I want to challenge the notion a little bit because college is so expensive. Over the last 40 years, college tuition, college costs has increased by 1200 percent. It’s 12 times more expensive to go to college in 2020 versus 1980, for example. Right. And that’s a huge shift.

The other thing I’ll mention is, even if you are wealthy, right. I guess even if you are a physician, let’s take a physician for example. But you have a couple of kids in college. Now you have to make a decision. Am I going to pay that lump sum upfront? Am I going to get it financed? That’s a decision you have to make because now you have two tuitions to pay. So it’s not only a problem for the middle class and, you know, there are more resources, there’s more awareness in those that have college educated parents. Like you said, yourself, now you’re getting involved with your kids and you’re talking to them about how to pay for college versus those that perhaps maybe are in the lower tier because their parents maybe didn’t have that same guidance or maybe their parents didn’t go to college. It’s advocacy, it’s knowledge of the system. It’s really trying to find the best way to pay for college, but also the packages that you get. I know kids of physicians that are now wanting to be dentists, for example, that are in $400,000 worth of debt. They got the loan. They were able to go to the best school, but will they really have the most income after they pay their college tuition or their outstanding loans? I’m not sure.

Monem Salam:
So then what do you do?

Abdullah Syed:
Let’s go all the way back in time, if you’ll allow me. Right. It’s about planning. Everything is about planning. Those that are listening to the podcast, maybe you’re a student right now, maybe you’re a parent right now. It’s never too late to start planning, right? Your kids are going to be young. Maybe they’re a year old. Maybe they’re four or five years old. Maybe they just got into high school. Let’s start saving up for their college expenses. We know that education is a true liberator. Education allows for us to really showcase our potential. We all have potential, but it’s about how we showcase that potential. Education gives us that well-rounded outlook on life and those experiences that we need, education that we need that knowledge, that we need, that mentorship that we need that comes with a college education to be able to be the best versions of ourself for this world. And that’s what we need. We need each truly talented individual to bring their best, and that’s how we’re going to improve society.

Monem Salam:
It’s really interesting you mentioned that in all of our seminars that we give and when we talk about education planning, we talk about the rising cost of colleges and there are tools available. There are even IRS benefits, like, for example, you can open up an education savings account where it’s only $2,000 a year. But if you do it every single year until they’re 18, it’s $36,000, you’ve saved, not including the growth, right?

There’s UTMA, which is universal transfer to minor accounts. There’s a Roth IRA that you can open. So there are ways to be able to do it. And we really encourage all these savings plans because you’re right, it does help quite a bit. And one of the major things that I hear all the time is, well, I don’t want to save money because that’s going to affect my scholarships. My answer to that is, well, you don’t want to bank on being needs based in, you know, 18 years from now. And that’s basically saying, yeah, in 18 years I want to be poor enough that I want to be able to qualify. That’s not planning, right? That’s that’s planning for disaster.

Abdullah Syed:
And one fallacy I want to just throw out of the window right now is that scholarships are need based. Yes. Many of the scholarships are needs based. But guess what? Many of the scholarships out there are merit based. You do well in schools regardless of how much you make or your parents make, you’re eligible for that scholarship. There’s other scholarships that have to do with the majors that you choose. There’s other scholarship that have to do with perhaps you’re a minority. And minorities have set up their own scholarships. You know what? There’s different types of scholarships. Take the time to go to these scholarship websites. Scholarships.com, FastWeb is one of my favorites. All of them work the same way. You set up your profile with as much detail as you can. Don’t skimp on the details because you know, whether you love hiking, you’re a new immigrant to the country or if you have a disability or anything like that could qualify you for a scholarship that’s out there. So need based scholarships are not the only stuff that’s out there. I would say equally the scholarships out there for different things that you want to do in life or perhaps different ideas of service you have for the community, different majors that you want to study. So go to these scholarship websites. Again, FastWeb, Scholly, Scholarships.com, there’s a bunch of others. Create that profile and they’re all cut and paste. Like once you write that essay, you’re just going to have to copy paste that, tailor that a little bit for the next application. And if you have your profile nicely put into one of these websites, you’ve just got to press the button and keep going.

Monem Salam:
I’ve told my kids, like, you spend an hour on a scholarship and you get even if it’s $1,000, that’s $1,000 an hour you have as a salary. Come on, you can even beat $1,000 an hour. So definitely worth the time and effort to do it. 

Abdullah Syed:
Can I mention a couple of other resources? ProFellow.com for graduate students because if you’re looking to go to graduate school or do a PhD program or professional school, you might even be able to get funded. They’ll pay you to go to school. ProFellow.com is another website that focuses primarily on graduate school. Just want to slip that in.

Monem Salam:
So let’s break this down a little bit further. So now you talked about planning from the very beginning. Right. Let’s supposing you’re in a situation where you have some you don’t have all of it to be able to pay for, but you have some that you did and you need to be able to subsidize some of that as well. Can you talk about a little bit the difference between subsidized and non subsidized loans?

Abdullah Syed:
Yeah, absolutely. I mean, I mentioned in brief there’s two types of loans that the government or the financial institution is going to offer you. One is subsidized loans. And usually these are for undergraduate students. That basically means they’re not going to charge you interest on those loans until six months after. And with the presidential order right now, all loans are frozen until June 30th anyway. And we’re hoping and praying that that goes beyond the 30th, because I really believe that principal only loans are the future for our country, that our government invests in principal only loans like they give you an amount of money that you need for college and you pay that money back without interest. Of course, administrative fees and all of what’s needed to make that happen.

We also wrote a letter to the government, to the president in particular, advocating for principal only loans with other organizations. But getting back to the topic, subsidized loans are those where take it if you need it. I would really like to push that if you don’t need to take a loan, don’t take a loan. But if you need to take the loan and you have no other way and we’re going to go over many options during this podcast, go ahead and take the subsidized loans. If you have no other options, please go ahead and take the subsidized loan. That’s only if you have no other options. 

An unsubsidized loan is let’s say you step your foot into school September 1st, or whatever day you signed a contract, is when the interest starts accruing right away and you never want that type of loan. Because it’s crazy, like an 18 year old can sign up to get a loan for like $100,000 that’s unsubsidized. We don’t sell them a home. There’s restrictions on getting a driver’s license you have to go through. But without any knowledge, without any training. Here’s a piece of paper. Sign it. You’re in debt for life. That is not going to be a long term solution in this country. We really need to invest in other types of loans and other types of finance for college education.

But yeah, if you’re asking me for the difference of subsidized loan and a subsidized loan, subsidized probably six months after you graduate to pay that loan, interest will start ticking and collecting and snowballing after six months. Unsubsidized loans, it starts on the day you sign the contract.

Monem Salam:
That helps quite a bit. So thank you for that. Looking at it from that perspective, I mean, I think one thing you mentioned was really important and that is that, you know, only if you need it. And from my experience traveling the country, seeing different Muslim student associations and students in those type of things, what I found is that many times people are taking these loans as a lifestyle choice rather than a need choice. Right? I mean, meaning that, you know, yeah, maybe they can cover some of their tuition and maybe all of it if they start working 20 hours a week. But, you know, they want that apartment. They want to keep their same lifestyle they had when they were living at home. They want to keep in college and then they end up taking out those loans. So you are a college student. So, you know, maybe you do need to kind of adjust your lifestyle and not take out those loans to be able to do that. But I do find that to be very common.

Abdullah Syed:
One thing I’ll say, Monem, to that is lifestyle choices drive us crazy. I mean, somebody could want to get the latest and best car, biggest home, you know, certain types of clothes, jewelry, whatever. Would you do that for education? Would you want a gold tooth installed as a lifestyle choice versus would you want to go to a college that you can afford and an apartment that you can afford. So look at it that way. Yes. You want comfortable enough where you can focus on school, but you want to be able to make those sacrifices so you’re not in long term debt. The choice is yours. The choice is literally in your hands. Do you want to be in long term debt or do you want to make the sacrifices to make this work?

One thing I’ll say right off the bat is we may look down upon certain colleges, in particular community college. But community college is like the lifeline for a lot of students that come out of school without much debt. So community college is your local college, right? It’s not too far away from you. You save transportation costs and time. Two, you are just a lot better because class sizes are much smaller, it’s more intimate. You get to learn more. Whereas big universities have weed out classes. They literally call them weed out classes. You start with 400 people. You end up with 200 people. The other 200 didn’t make it. Either they were not interested, the material was too much, or they fail to meet their marks. So community college, I’m such a big advocate for. 

Personal story. Going on a little tangent, here. When I graduated I said I’m not going to go to UConn, I still lived in Connecticut, because I know everybody at UConn. I want to be far away from everybody. Right? Personal choice, right? So I went to Purdue. I really wanted to go into engineering, particularly aerospace engineering. I did it. I went into business management major. I learned that aerospace engineering in particular wasn’t for me. I still love it. I still love to gaze at the stars and whatnot. But maybe that particular major wasn’t for me. I get to college, a super big shock, right? You’re away from home for the first time ever, learning how to cook, learning how to shop. At that time, cell phones weren’t a big thing. But, you know, you get your own cell phone, you’re getting a lot of things that you didn’t have before, and you’re having to manage multiple angles in multiple dimensions of your life that they didn’t manage before, right? Making your own food, clothes, transportation, communication, picking your own classes. So we go from like parents being involved to parents being completely uninvolved, and you being in a different planet. And some people that thrive with that because they find another tribe, another community that helps them, and some people, they don’t thrive with that. I was at Purdue for a couple of years and didn’t do that well. It was amazing. I learned a lot. I made a lot of friends I’m still in contact with now, I had life experiences that altered me up until this day. 

But in two years I came back home completely broke, understanding that my father’s salary wasn’t enough to pay for college, that he was taking out parent plus loans, understanding that that transition was a little too much for me. I came back home and wanted to transition a little bit more slowly from being at home to being away in one day right? So I went back to community college, so my GPA I can’t even mention my Purdue GPA on this show. But in one year of transitioning to community college, my GPA shot up to like a 3.7. I understood all the classes I was taking. I was back on it again. Then I transitioned to another four year university. I graduate from Texas State University and cum laude. I graduated top of my class.

Monem Salam:
Congratulations.

Abdullah Syed:
Yes. And it was it was such a fantastic experience, but it took me a learning and I lost some money and I lost a lot of, you know, respect for myself there and regained it by going through the community college system. I truly believe that maybe not every kid, maybe a lot of kids have it figured out. And I would like to say from hundreds of students that I’ve spoken to, that those would be the minority that know what they want to do, know exactly where they want to go, have the funding and have the parental support to do it. And have a tribe at that university that they can rely on.

Great. Go for it, because you are one of those that they’ll get it done. Then there is the others, I would say maybe vast majority, that need that transition in community college is the key. You save money, a whole lot of money, going to community college, whereas our might be $150 to $200 and one credit hour in a four year university is going to be $1,200 to $1,500.

But it’s ten times cheaper to go to a community college and your transition is a lot easier and you get into the groove of it. You figure out your major. One of our crises is there’s so much opportunity, our students are not able to really decide a major until they go to college and they may change the major every two years. So people are graduating now in five or six years, right? That’s a lot of money that you and your parents invested in your education. I’m glad you found through experience and by burning money where you wanted to go. But if you go to community college, you save that time and money. So that’s my little tangent and my story.

Monem Salam:
No, no, I appreciate that. So what you know is one thing you highlighted in there I want to clarify on and that’s you said something about a parent plus loan. So can you talk a little bit about that and what that is?

Abdullah Syed:
As there are those directly to the student, which, again, our government has not trained and there’s no course that these 18 year olds can go through to understand what they’re signing. But there’s loans that go directly to the student. We talked about subsidized and unsubsidized loans, and that FAFSA letter. There’s also going to be grants, which is great, accept them. And if that’s not enough, there’s also parent plus loans, which your parents take. Usually the interest rate is a little bit higher. That’s an additional loan. So you take out a loan and then your parents have taken a loan to bridge the gap. And the parent plus loan is something I didn’t know my dad had taken until later. Then I was like, Wait, you have to take a loan to send me to college time in addition to me taking a loan out? That doesn’t make sense. 

Monem Salam:
I’m just going to assume that’s going to be unsubsidized as well. So interest starts right away.

Abdullah Syed:
Correct, most parent plus loans are unsubsidized. I believe now there is the genre of subsidized parent plus loans as well. I advise listeners to look into it.

Monem Salam:
Overlying or underlying or overlying, whatever you want to call it, all this is the fact that, you know, this is a Halal Money Matters podcast, so it should be a given that when you’re going to take these interest loans out, interest are haram, right, that’s forbidden. And so, you know, you’re basically from an actual financial perspective, you’re getting into a hole. But then also in the hereafter you’re getting into a hole. So it’s like a forum for Muslims, it would be like a double negative, right? And maybe even more than that, because the interest part is so much worse than whatever you can face in this life.

Abdullah Syed:
Yes, absolutely. Sometimes we don’t realize that because our thinking is clouded by what’s in front of us. I need to go to college. I need to go to this college because my friends are going there, or for some other students, I have to go to this college because I really believe in this college.

But you need to take a step back and see, like I would say, five or six key elements. One of them is transition. Are you able to successfully transition from where you are now into that college? Right. Or is that going to be too big of a jump for you? Two is, finances. Are you going to be able to finance this journey in a halal way, like you said. And three, I think is also culture, right? Let’s say you’re going to a college where there’s nobody that can help you with your faith matters, right? There’s not a Muslim community. And it doesn’t have to be a Muslim community, but there’s no Muslims at all. There’s no chaplain, it could be an interfaith chaplain. There’s no prayer space. There’s no understanding of halal or haram. That is part of your transition, but it’s also part of your your faith and protecting your faith identity. Right. Those are amongst a few things that I think people should look into when they’re selecting a college.

Monem Salam:
You bring up an interesting point because you mentioned about prestige and those type of things, right? So let’s supposing that my daughter got into Harvard and we can’t afford it and she got into a state university, which we can afford. Now, a lot of people would say, Wow, it’s Harvard, let me go out and take the loans or do whatever it’s because, you know, hey, it’s education and benefitting the ummah, that type of thing, or is it better to do the state university? Now, I know the answer to that question for myself. Obviously. I think you probably know what I would say but I want to hear from you and maybe what anecdotally, what you’ve heard from other people as well.

Abdullah Syed:
So Harvard is a unique example. So we could take, for example, a different university. But Harvard’s not going to let you get into school and drop out because you can’t afford it. So Harvard will find a way because they have one of the world’s largest endowments to keep you in school and take care of your finances. And that’s the other thing, like whatever school you’re at currently or you got into that you want to go to, go talk to that school. Two places, your department, whatever department, you got into, go talk to them about what additional resources are available in terms of scholarships, in terms of forgivable loans, and then go to the financial aid department and talk to them about what is available. Because, you know, on these websites, perhaps those alumni funds are not going to be available at the university they’re available. So it’s about having those conversations. 

But let’s just say you got into an amazing school. It’s a private school, it’s super expensive. If they’re not going to take care of you, if they’re going to make you go to debt, and Harvard doesn’t seem to be like one of those, anybody who’s who gets into Harvard is able to afford it with the financial packages that they give. But let’s say in this X University you get into, you’re not able to afford it versus a state school that’s still reputable and still has that quality of education that you got into where the finances make sense. Over here, let’s say in X school, you have to take interest based loans. State school, you don’t have to take interest based loans. No brainer. Go to the state school because you don’t want to be in debt forever. 

Like I said, ProFellow.com and other resources, talking to your universities, your department, and also your financial aid office. Most universities that you get into, if you’re doing well, or if you did well, will want to keep you. They’ll definitely make it work for.

Monem Salam:
You know, that’s great. And so I want to kind of by the way, Scott, do you have anything?

Scott St. Clair:
Yeah. The advice I always got when I was applying to schools was for your undergraduate, go to the state school, save that money, get the four year degree and then once you’ve graduated, if you want to keep going to school for that graduate degree, a lot of these more prestigious schools will pay you to go there for your graduate degree. So that can be really nice to save the money early on.

Monem Salam:
Yeah, sure. I know. And kind of switching gears a little bit, obviously in the realm of education, when you look at it from an Islamic perspective and now we’re going to talk a little bit about what you do in those type of things. But before we do that, how is traditionally Islam looked at education, funding of education, those type of things? You have any thoughts on there?

Abdullah Syed:
Yeah, Before I do, one resource I forgot is Muslim Campus Life. So there’s a new website and a new organization Muslim Campus Life. Amazing brother Salman Khan. I think that he’s actually at Harvard.  That resource helps Muslim students understand which campus accommodates most to them, whether it’s halal food, whether it’s a chaplain, a place to pray, percentage of Muslim students at that school. So on so forth. So muslimcampuslife.com. And they also have a booklet they can download and go through. 

You know, I’m not sure about classical Islamic thought, but here’s what I can say. It’s so powerful. It’s so powerful that our book and we’re talking today in Ramadan, it starts with Iqra right. But Monem, let me ask you, how many times does Iqra come in the passage?

Monem Salam:
In the entire passage? Twice.

Abdullah Syed:
Twice. There you go. So.

Bismillah arrahman arrahim; a’oodhu billahi minash shaytaan arrajeem.

Iqra bi-ismi rabbika allathee khalaq. Read in the name of the Lord who created you. 

Khalaqal insaana min alaq. He created human beings out of blood. 

Iqra, wa rabbukal akram. Read in the name of your Lord, the most generous. 

Alladhee alam bil qalam. The one who taught you with pen. 

Alamal insaana ma lam ya’lam. He taught human beings what they did not know. 

Iqra is so powerful. And our tradition starts with that. It doesn’t start with one Iqra. Monem, it starts with two Iqras. 

And what’s the difference? Right? One Iqra is religious knowledge. The first Iqra, bismi rabbi kalladee khalaq, Read in the name of your Lord. Now that’s divine. We’re talking about the Quran. And then the other one is, God taught human beings with a pen. What type of knowledge is that? That is your worldly knowledge, right? We’re in this world and we use the resources around us to benefit us and to benefit mankind. That could be a car. Car didn’t just drop from heaven. They had to be created by creative minds and using the resources that we have here on earth.

Right. So that knowledge is also very precious. And just like the divine knowledge that was just mentioned in the Quran. And so for us, our tradition has always been of both types of knowledges. It’s both types of knowledges that allowed Islam to spread, right? At one point within a hundred years of the Prophet (sallallahu alayhi wassalam Peace be upon him) passing away Islam ruled the majority of the known world at that time. And that was because of the combination of the two Iqras.

In our tradition, if somebody is enslaved, which is not pleasant at all, you know, there’s a lot of rewards for freeing a slave. But if a slave teaches somebody how to read and write, they’re free, right? That’s found in our tradition. There’s so many other things that are found in our tradition that have to do with knowledge and the sacredness of knowledge and teaching others.

Matter of fact, that’s one of your sadaqah jariyahs, right? You teach somebody something. And how do you teach them? Because you have to have knowledge. You teach somebody how to write. You get the reward of them writing for life. Our tradition is so based on knowledge.

Monem Salam:
And that’s why I mean, I think traditionally also and even now, there were patrons who would pay for people to study. But then also zakat was used as a source to pay for education as well. And so you have this this tradition of, you know, more like grants or scholarships, in the modern world. We’ve had that in our tradition for a very long time. And we’ve really we haven’t gone away from it. There are there are different organizations that keep doing it. But definitely from the aspect of a patron perspective, like, I come to you and say, look, I really think, you know, that you have a lot of potential, so I’m just going to cover your education for you because I know you’re going to do great things in your life, right? Those things don’t happen anymore. But that kind of brings in a little bit about A Continuous Charity, where you are an executive director. And so maybe you can talk a little bit about how it got started, what you guys do, what other resources you can provide for potential or existing students.

Abdullah Syed:
Absolutely. Just to piggyback off of what you said. It does happen in the modern-day era, too. You’ll hear of a celebrity on Instagram posted of a picture with a fan, and the favor they did to the fan is like paid off their outstanding college debt. Or you’ll hear of others coming into a high school and saying they’ll cover everybody’s tuition, it’s a local businessman. It does happen one off. And we’ve seen that generosity.

Monem Salam:
But few and far between, I guess.

Abdullah Syed:
Exactly. So how do you do that as an institution? Right. That’s what you and I want to discussed today, because I want to think long term. So the Muslims have done this and I’m sure other communities have done this in a way of an endowment. 

What is an endowment? You’re putting aside assets, whether they’re real assets like an apartment building, or there are other types of assets, and the growth on those assets goes to serve that purpose. That principal can never be taken away. That principal in eternity is going to generate revenue for that one particular purpose. And that purpose, for example, could be feeding animals. It could be for students to go to study Islamic education, for example, or also for health care needs. So those endowments have existed for such a long time. 

You know, even in our faith tradition in Medina, the palm trees of Medina. Until the day, the fruits that come from the palm trees and the revenue goes right back into serving those that that are making the hajj or visiting Makar Medina. It’s amazing that that was 1400 years ago, but that endowment still continues. 

So likewise, A Continuous Charity was set up by American Muslims as an endowment to take care of education for American Muslims. Why do we exist? Why does A Continuous Charity exist? A Continuous Charity exists because, like you said, the double whammy. One is costs of education in America is so high, an average person may not be able to afford it, that it will just deter them from getting an education. That if they do go seek an education, the double whammy is, well, it's against our faith tradition to indulge in interest. For example, that subsidized loans, well, that’s okay for four years. But what happens after the six months after you graduate. That creeps up on you real quick. The unsubsidized loan or the parent plus loan that’s going to be from day one that you’re paying interest on.

We wanted to create an alternative. And this is not an alternative that can help everybody and anybody, because our endowment is still small. Alhamdulillah, we’ve been able to give out $6 million in loans to 450 plus students, averaging between $18,000 to $20,000 per loan. And what we do is, we push the student. Apply for scholarships to ask their parents and their friends and family and their community for resources, save up themselves. And we bridge the gap. And with that gap we raised so far $6 million. Part of that is actually recycled money because these are interest free loans that students pay back. So our students have already paid us back $2.2 million. The system is for students by students if you will, and that we’ve saved $3.5 million in interest because the average American pays their college loans over 18 years and now it’s creeping up to over 20 years. And our students are done paying us back in an average of four years. So they’re not only interest free, but they’re debt free within four years. They can move on with their life, make substantial decisions because this is not hanging over their heads. This is not a financial decision they have to think about any more.

That $3.5 million, where is it now? That interest that’s saved that didn’t go to the financial institutions or to the government, but that’s now in our communities, either at the dining table or sending another kid to college or investing to build other institutions. So that’s the beauty of the endowment, is that once we’re putting money in, it’s for this purpose, the principal isn’t touched. Students are getting an education. Not only are they paying back the loan, which is like paying it forward, many of these students, currently only about 20%, but we hope to grow that, they are donating back to the endowment. Now they’re donors to the endowment.

Monem Salam:
The more students that graduate, the more people pay back, the more they’re going to give more because they have affiliation towards it, like a virtuous cycle that actually keeps going. Have you heard of anything like this outside of whatever you guys are doing in the US?

Abdullah Syed:
There are other efforts, definitely. They’re more like family based or masjid based. So like a masjid would have, for example, a scholarship. For example. There’s an organization in Minnesota which we acquired called MYLA, Muslim Youth Leadership Award, and for the last 20 years to have given scholarships. And now they’ve converted to giving interest free loans. Like that, there’s other community based, either city based or local based organizations that even an uncle or an aunt would give a loan without interest. So this has been happening on a smaller level, but luckily with Allah’s help, and with the community’s support and belief in the cause, we’ve become a national organization.

Monem Salam:
Actually, in doing my research a few years back on interest free loans, I actually found there’s some cities around the country that offer interest free loans as well. Some of those like for example, the one I was particularly looking at was in Baltimore. They had a 0% default rate. Like they’ve been running for like 25 years or something. Nobody’s ever defaulted. It’s amazing because they realize the benefit of it and they wanted to help other people and they realized there was a sense of responsibility that if they didn’t pay it back, other people would suffer because of it as well. So there was a couple of different cities around the country. I don’t know if it’s ubiquitous all around, but it’s definitely there. So that’s why I was wondering if you knew of any kind of models like this around the country.

Abdullah Syed:
Yeah, there definitely are Muslim communities and like you said, cities and others that are doing this as well. What I’ve seen as well is a higher education has become a topic that politicians are talking about, right? So it benefits them if they come up with a policy like New York State, for example, that has a policy, I think so over $120,000, if you combine as a family, make under $100,000, you’re eligible for free state tuition in state schools. So there are definitely a lot of opportunities that are coming up and our students to look into it, look into their local resources first and then national resources so they don’t miss out on those local resources that you mentioned. The city of Baltimore, also city of Atlanta has something similar.

Monem Salam:
Scott, do you want to jump in?

Scott St. Clair:
Yeah, I was actually curious from a student perspective, maybe the parent of a student, if they’re trying to get access to these resources, specifically A.C.C., what does that process look like on their end? Because I applied to college, FAFSA, government loans, went through that whole process. What does it look like if I’m trying to avoid those interest bearing loans, I’m trying to get access to these resources? 

Abdullah Syed:
Real quick, we’ve got our application process and I’ll just go over the application. But one thing you just mentioned is so key is parents. I think parents should get involved. I mean, parents are involved usually in most things school related. But when it comes to college, sometimes parents are hands off. They’re like, well, you pick the college, pick the major, you know, you get whatever loan you want. Like you apply to whatever scholarship you want. Let’s change that conversation to parents being involved from the very beginning, like Monem said, investing and saving up for the kids education, the growth they’ll see and the principal that they’ve invested. And then also in the process of talking about college, they talk about education. And what we see is different trends.

For example, younger age groups sometimes are opting for coding bootcamps or even folks that got an education long ago, but they wanted to redo their skills. They get a certificate right? Education is continuous. So looking at it in that way, I think parents should be involved from the very beginning, at least guiding students and sitting with them, helping to fill out the scholarship application, helping them understand the requirements. 

So at A Continuous Charity or A.C.C., we’ve got four main criteria that we go by. So one is merit. How well you did in school, either high school or undergraduate, whatever you apply for, because it’s community money. We don’t want to just give it to anybody. So we have particular thresholds. 

Number two is need. So need is not defined by you have to be under the poverty level or something, need is defined by what is that gap that you’re not able to fill, after you talk to your friends and family, apply for scholarships, then you still have to take interest bearing loan, but we don’t want you to. So what is that gap that we can give an interest free loan for. 

Number three is community service. Our program is more geared towards those that are serving the community in some way or have ambitious plans to do so in the future because, again, it’s community money. We want them to benefit from the knowledge that they’re seeking and then use that knowledge to give back to the world. 

Number four is Islamic education. So this is primarily for Muslim community, those that are seeking to better themselves in some way and understand their faith in some way, whether that’s learning the Arabic language, memorize the Quran, whatever the smallest level to the highest level, because we know everybody’s had a different level of trying to better themselves. Because as Monem mentioned, people feel obligated when they get that 0% interest rate from the city of Baltimore to pay it back. So we feel those people would get obligated to us, especially if they’re coming with the right intention, right intention of bettering themselves, serving the community. And that’s why we have those parameters in place. So your second question, so remind me, that was how you apply.

Scott St. Clair:
Yeah, exactly. What does that process to look like for the student themselves?

Abdullah Syed:
So the application is quite rigorous. And I’ll say only about 20% of people that actually end up applying receive the loan. It’s a rigorous process throughout. We’ve got different sections. We’ve got three essays. One of them is more like a personal statement. Tell us about yourself. And another one is more of the challenging aspects of your life and how did you overcome it.

There’s another question in there of what is your intention behind getting the loan? So those are some essay questions there. There’s also a section where you tell us about your GPA, how well you did in school, recommendation letters are part, that merit part that I’ve talked about. That’s also there’s a need part is also there, telling us about what other loans you may have. What is your family’s income? How much is going to be your personal contribution versus your family contribution? We want to know those things. We want you to know those things so you make a better decision by listing it out. You know them. We would also like to know them so we can make a better decision about who meets the criteria of need, merit, community service, Islamic education, so all those questions are in the application. Just go to acceducate.org and you’ll see they apply button there, read the criteria, read the FAQs before you apply. 

Application is generally open from January 15th through April 15th. If you don’t meet that criteria, you can always try to apply next cycle or tell us if you have a genuine need even outside of cycle, we do consider students outside of cycle. We consider both types of students, students that are currently in college, right? So like they need a loan just to go to college. Then there’s graduates who are in debt. They don’t know how to get out of that debt. We can also refinance them as well. Hopefully they’re working so they’re able to make bigger payments and we can, once they’re done paying, use that money again for the next student. That’s how it works. You know, give it to one student, they pay back to the pool for the next student, while trying to grow the pool by fundraising as well.

Monem Salam:
So you mentioned this now, which is a graduate school is there. What about medical school or dental school, those type of things. Do you also help in those areas as well?

Abdullah Syed:
Yeah, it’s surprising. We’ve got a lot of medical school students, PAs, dental school students, lawyers. So like the professional degree programs, we do have a lot of students from that as well. And it’s all about like, one, how much they need? Sometimes we’re not able to afford what they need. Our cap is roughly $40,000. We don’t have a true hard cap, but that’s kind of a marker for us to know if we can afford it. And we also need a student to create a plan. What’s their personal contribution? Family contribution, community contribution? Have they talked to this school about reducing their tuition by going to the department, by going to the financial aid office, so on, so forth, and really working with them individually to reduce their burden as much as possible and reduce the gap. Like an average bank wants to give you whatever loan you need because they’re going to charge you interest over time, they want you to pay the minimum amount. We want you to take the smallest amount of loan you need to pay the biggest amount and get out of that as fast as you can. We have helped quite a few medical students as well.

Monem Salam:
And then also there are other resources like you mentioned that people can go to. I mean, I know some people paid for their medical school or dental school through other means. For example, you know, like for teachers like Teach for America, I think there’s a rural program for medical students as well. So there’s a lot of other options as well that that people go to. A lot of times they just don’t exhaust them. They just don’t even look, right? The military might be another option for for some people, I think, if they so choose to do that as well.

Abdullah Syed:
Yeah, there’s a lot of options out there. Exhaust the options, look into all forgivable loan options. For example, you mentioned medical school going to rural areas to teaching inner city kids. That’s going to be an experience that changes you, not only gets you of forgivable loans, for example. So A.C.C. wants to be the last resort. We want you to do all your homework, apply for all scholarships, look at all programs in your local area and related to the field that you’re studying, and if you truly have, A.C.C. will give you a loan to bridge the gap.

Monem Salam:
This has been really great, right? So we talked a little bit about scholarships. We talked about subsidized versus nonsubsidized, parent plus loans. But the biggest overarching things are plan early, but it’s never too late to start saving or investing for the education. And there’s multiple different options available. You can find them at amanafunds.com for like education accounts and those type of things.

Once you actually are in the process of applying in those type of things to colleges, the best option is not always the most expensive one. Sometimes for different people, community college, you might go to a state school, you know, those type of things. It’s really the college needs to fit your need and not the other way around. 

The last thing we talked a little bit about was what specifically A Continuous Charity does, which just gives those kind of interest free loans out there. There are other programs to look into those as well. Am I missing anything?

Abdullah Syed:
No, I think that’s quite comprehensive. Again, if folks have any questions, go to our website, communicate with us. We’re more than happy to assist in whatever way we can.

Monem Salam:
Yeah, that’ll be great. So I really appreciate your time spending with us and, and hopefully people, our shareholders and our audience will be able to benefit from a lot of these different resources. So thank you very much, man. Assalamu alaykum.

Abdullah Syed:
Thanks for having me, Monem, Scott, Saturna, and Amana Mutual Funds. I really appreciate it. A.C.C. is here, acontinuouscharity.org, or acceducate.org, please look us up ask us for whatever help and resources you need. Take care. Assalamu alaykum.

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DISCLOSURES (read by Christopher Patton):

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