Asian Social Science; Vol. 10, No. 22; 2014 ISSN 1911-2017 E-ISSN 1911-2025 Published by Canadian Center of Science and Education 175 The Relief of Higher Education Loan through Islamic Waqf Bank Muhammad Ridhwan Ab. Aziz 1 , Mohd Asyraf Yusof 1 , Fuadah Johari 1 , Asharaf Ramli 1 & Hisham Sabri 1 1 Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Nilai, Malaysia Correspondence: Muhammad Ridhwan Ab. Aziz, Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Nilai, Malaysia. Tel: 60-6-798-6410. E-mail: ridhwan.aziz@usim.edu.my Received: July 6, 2014 Accepted: August 29, 2014 Online Published: October 30, 2014 doi:10.5539/ass.v10n22p175 URL: http://dx.doi.org/10.5539/ass.v10n22p175 Abstract Islamic waqf bank is a special designed financial institution in Islam. This bank will benefit the students and also their parents, due to its unique structure that could finance student’s education in term of fees and cost of living. Islamic waqf bank use the concept of cash waqf in terms of funding the education. The gifted capital or cash waqf was “transferred” to borrowers for certain period, which was then spent for all sorts of pious and social purposes inclusive for the investment objectives. It is recognized that there is no ample study in the area of cash waqf especially for managing Islamic waqf bank institution. Therefore, the study for managing cash waqf fund through Islamic waqf bank is essential in order for the fund to be use efficiently. The objective of this article is to explore the relief of higher education loan through Islamic waqf bank. Keywords: waqf, Islamic waqf bank, cash waqf 1. Introduction 1.1 Introduction to Waqf Waqf which (pl. Awqaf) is called Boniyad in Iran and Habs (pl. Ahbas) in North and West Africa. However, by taking its different meanings into consideration, waqf can be applied to non-perishable property whose benefit is extracted without consuming the property itself. Although waqf is not specifically mentioned in the Holy Quran, the concept of wealth distribution is strongly emphasized therein (Chowdhury et al., 2011). In fact, in the Quran, there are many verses which discuss and encourage Muslims to donate and give charity such as in Surah al-Baqarah (2: 261), al-Baqarah (2: 271), Ali Imran (3: 92), Ali Imran (3: 134), al-Lail (92: 18-21) and al-Hadid (57: 18) (Aziz, 2012). From Shariah point of view, waqf may be defined as holding a mal (an asset) and preventing its consumption for the purpose of repeatedly extracting its usufruct for the benefit of an objective representing righteousness or philanthropy. This definition also covers several new forms of waqf that were not discussed in the classical literatures, such as the waqf of financial rights and waqf of usufruct (Kahf, 1998).The contemporary jurists also justify the validity of the cash waqf, because it is in the interest of the waqif (the donor), its beneficiaries and the society (Tahir, 2011). In addition, waqf assets can also be immoveable or moveable. In cash waqf, al-Waqif (donor) endowed cash instead of real estate. Cash waqf begin in primeval Mesopotamia, Greece and the Roman Empire. In fact, in the eighth century, Imam Zufar had approved cash waqf in the Islamic World for the first time. According to him, cash waqf would be invested through Mudarabah and profits would be spent for charity. Nevertheless, cash waqf did not expand and mature until the 16th century and after that century; it became popular, especially among the Ottomans. Many Muslims did not get chance to participate in waqf endowment because there is a wrong perception among Muslims that there may be waqf endowment through only land not in cash. They believed that land can fulfill the three conditions of waqf such as perpetuity, irrevocability and inalienability. However, land may be subject to demolition, destruction due to the natural calamity and waqf will only last till its value exist (Mohammad, 2008). Through proper cash waqf management, it is easily possible to hold waqf value as well as value enhancement. As a result, those who do not have land can participate in endowment through cash waqf. Nowadays, people have more choices for waqf by including cash into waqf. Furthermore, cash waqf is far more important since it is more productive compared to land, buildings, books, cattle and so on, as it is testified by the existing research studies and have been found profitable in the practices of modern Islamic financial system (Chowdhury et al., 2011).