Answered by Shaykh Faraz A. Khan
Question: I have a student loan of about $20,000 that is interest free as long as I don’t leave the country for more than 6 months. I have a small monthly installment to pay when I earn above a certain amount, but I don’t currently earn anything so I’m not paying yet. I have gold which was given as a wedding gift, and if I sell it I should be able to pay the loan off but my family will be very upset and that is the only savings we have. We even want to do hajj next year inshallah so we are kind off dependent on that gold. So my questions are:
1) how is my zakat calculated for the gold i have with this loan?
2) can i do hajj with this kind of deferred loan?
Answer: Assalamu alaikum wa rahmatullah,
I pray this finds you in the best of health states.
1) Normally with a long-term debt, one can deduct up to one year worth of payments when calculating zakat. Yet since you have not started paying any installments, it would seem that you would not deduct anything. Zakat is therefore owed on the gold you have (as well as any cash, silver, etc).
2) Since going on hajj would not delay payments on the loan, and you do not have any overdue payments, then it would be permissible to go on hajj. However, if your liabilities exceed your assets then hajj is not obligatory on you in the first place. [Ibn Abidin, Radd al-Muhtar]
Moreover, it is wise to pay off debts as soon as possible — if you have the means now, you may want to consider doing so and postponing hajj for later (inshaAllah). If you are selling your gold for hajj anyways, you can explain to your family that you prefer to sell it to pay off your loan, as that has highest priority since it is a debt.
And Allah knows best.
Checked & Approved by Faraz Rabbani