Earnest vs Edly: Private student loans compared
Choosing between Earnest and Edly represents a choice between two fundamentally different ways of financing a college education. For families trying to minimize cosigner risk and students worried about monthly affordability, the distinction is critical.
The core difference is the financing model: Earnest offers traditional private student loans where you borrow a set amount and repay it with interest over a fixed timeline. Edly specializes in income-share agreements (ISAs) and income-based loans, where you agree to pay a percentage of your post-graduation income for a specific period.
In this guide, we will break down exactly how these models differ regarding eligibility, total costs, and safety nets. You will learn which option provides the predictability parents often prefer and which offers the flexibility students entering uncertain job markets might need.
By the end of this guide, you will be able to:
- Identify which lender aligns with your credit history and career goals.
- Compare the long-term cost implications of a fixed interest rate versus an income percentage.
- Make an informed choice based on repayment flexibility and hardship protections.
Quick comparison: Earnest vs Edly at a glance
Before diving into the mechanics of each lender, it is helpful to see a direct comparison of their features. This table highlights the structural differences that will drive your decision-making process.
| Feature | Earnest | Edly |
|---|---|---|
| Loan Model | Traditional Private Loan | Income-Based Repayment / ISA |
| Credit Check | Hard credit check required | No credit score required |
| Cosigner | Often required for students | Not required |
| Payment Structure | Fixed monthly principal + interest | Percentage of gross income |
| Rate / Cost | Fixed or Variable Interest Rates | Income Share % + Payment Cap |
| Hardship Protection | Up to 12 months forbearance | Payments pause if income is low |
| Best For | Borrowers with strong credit/cosigners | Students without cosigners/credit |
Source: Earnest.com and Edly.com (Program terms as of January 2025)
Earnest operates like the loans most families are familiar with: you owe a balance, and interest accrues daily. Edly operates on outcomes: your obligation is tied to your future paycheck, meaning your success dictates your payment size.
Why it matters
- For Families: Earnest usually requires a creditworthy cosigner, putting parental credit on the line. Edly typically does not, protecting family finances.
- For Students: Earnest offers mathematical certainty on what you owe. Edly offers downside protection—if you don’t earn enough, you don’t pay.
- Total Cost: Traditional loans have a fixed payoff amount; income-based options could cost more than the original principal if you earn a high salary.
Understanding the two models: Traditional loans vs income-share agreements
To make the right choice, you must understand the engine driving these financial products. The difference between Earnest and Edly is not just about interest rates; it is about how debt is structured and repaid.
Earnest functions as a traditional lender. When you take out a loan, you borrow a specific principal amount. Interest begins accruing immediately (though payments may be deferred while in school). You are assigned an interest rate—either fixed or variable—based on your credit profile.
Under this model, your monthly payment is determined by the loan balance, the interest rate, and the repayment term (e.g., 10 years). Regardless of whether you land a high-paying job or face unemployment, the monthly amount due remains the same unless you actively apply for temporary relief. This model rewards financial stability and high credit scores with lower costs.
Edly utilizes an income-based model, often structured as an Income-Share Agreement (ISA) or an income-contingent loan. Instead of an interest rate, you agree to pay a fixed percentage of your gross income for a set number of payments or a set period of time.
This structure shifts the risk. If a graduate earns a high salary, they pay more per month (up to a specific cap). If they earn a low salary or are unemployed, payments pause or decrease automatically. There is no “interest rate” in the traditional sense; instead, the cost of the loan is variable based on career performance. This model is designed to align the cost of education with the value it provides in the workforce.
For more on how these structures fit into the broader landscape, read our guide to private student loans.
Eligibility requirements: Who qualifies for Earnest vs Edly
The criteria for approval differ significantly between these two lenders. Earnest looks at your past financial behavior, while Edly looks at your future potential.
As of January 2025, according to Earnest.com, the primary borrower or cosigner typically needs a minimum FICO score of 650, a steady income, and no history of bankruptcy or recent collections accounts. Because most undergraduate students do not have established credit histories or sufficient income, a cosigner is frequently necessary.
According to Mark Kantrowitz, financial aid expert, “Most students will need a cosigner to qualify for a private student loan.” This reality makes Earnest a joint decision for many families, linking the student’s education debt to the parent’s credit report.
Edly takes a different approach by not requiring a credit score or a cosigner. Instead, eligibility is largely determined by what you study and where. According to Edly.com, they fund students in specific majors—typically STEM, healthcare, and business fields—at eligible non-profit schools. They assess your academic progress, requiring you to be a junior or senior in good standing.
Eligibility comparison:
- Earnest: Open to most majors but requires strong credit history (or a cosigner) and proof of income.
- Edly: No credit or income history required, but restricted to specific career-focused majors and upperclassmen.
This distinction makes Edly a strong contender for independent students who cannot find a cosigner, while Earnest remains a go-to for families with strong credit profiles.
Costs and payment terms: Rates, percentages, and caps
Calculating the cost of borrowing is straightforward with a traditional loan but requires some forecasting with income-based financing. Here is how the costs break down.
With Earnest, your cost is defined by your interest rate. As of January 2025, Earnest offers fixed rates of 2.99% - 12.78% and variable rates of 0.94% - 11.44%. A fixed rate stays the same for the life of the loan, ensuring your monthly payment never changes. A variable rate may start lower but can fluctuate with market conditions.
Your specific rate depends on your (or your cosigner’s) creditworthiness. Borrowers with excellent credit secure the lowest rates, minimizing the total cost of the loan. You can easily calculate the total repayment amount before signing by using a standard loan calculator.
Edly does not use an interest rate. Instead, you pay a percentage of your pre-tax income. As of January 2025, according to Edly.com, this typically ranges between 4% and 12%, depending on the amount funded and your major.
To prevent high earners from overpaying drastically, Edly includes a “repayment cap.” This is the maximum amount you will ever pay back, typically expressed as a multiple of the funded amount (e.g., 2.25x the original loan). There is also an “income floor”—a minimum salary threshold (often around $30,000 as of January 2025). If you earn less than this floor, your monthly payment is $0.
Consider a borrower taking $10,000 in funding:
- Scenario A (High Income): With Earnest, you pay the principal plus interest. With Edly, you might hit the repayment cap, potentially paying back more than the Earnest loan would have cost.
- Scenario B (Low Income): With Earnest, the payment remains due. With Edly, payments pause or stay low, potentially resulting in a lower total cost or a longer repayment timeline that eventually expires.
Loan amounts and borrowing limits
How much you can borrow often dictates which lender is viable, especially if you have a significant tuition gap to fill.
According to Earnest.com, as of January 2025, Earnest generally allows you to borrow up to the full certified cost of attendance, minus any other financial aid you have received. There is a minimum borrowing amount (typically $1,000) and an aggregate limit for total student loan debt depending on your degree type (e.g., medical students have higher limits than undergraduates).
Because Earnest bases limits on creditworthiness and the school’s certification, families can often cover large balances—such as full tuition and room and board—in a single loan application.
Edly typically offers smaller funding amounts compared to traditional private lenders. Their model is often used to close the “last mile” gap rather than financing an entire four-year degree. According to Edly.com, funding limits are determined by your expected future income and the specific program you are attending.
While Earnest can cover the bulk of college costs, Edly is better suited for bridging a shortfall of $5,000 to $15,000 when federal loans and other aid have been exhausted.
Note: Before applying for either, ensure you have maximized your federal student loan options, which offer unique protections and lower fixed rates.
Repayment terms and flexibility options
The timeline for paying back your education debt differs significantly between the two lenders, affecting your monthly cash flow for years after graduation.
According to Earnest.com, as of January 2025, Earnest offers customizable loan terms, typically ranging from 5 to 15 years. One of Earnest’s standout features is the ability to choose your exact monthly payment and let the term adjust to match, giving you control over your budget.
Borrowers can choose from several repayment options while in school:
- Deferred: Make no payments until 9 months after graduation.
- Fixed: Pay a small fixed amount (e.g., $25) while in school.
- Interest-Only: Pay the accrued interest monthly to prevent the balance from growing.
- Full Principal & Interest: Start full repayment immediately to save the most money.
According to Edly.com, Edly’s repayment term is based on a number of required payments or a maximum duration window. For example, a contract might require 48 monthly payments. However, these payments only count if your income is above the minimum threshold.
The repayment window typically opens after a grace period post-graduation (often 4 months). Because payments are tied to income, there is no need to select a “term length” upfront; the loan is satisfied when you have made the required number of payments or reached the repayment cap.
Hardship protections: Forbearance, deferment, and safety nets
Financial hardship is a reality for many new graduates. How a lender handles unemployment or low wages is a critical safety consideration.
Edly’s model offers superior automatic protection against economic downturns. According to Edly.com, if you lose your job or your income drops below the minimum income floor (e.g., $30,000 as of January 2025), your payments automatically pause. You do not need to apply for this; it is a contractual feature of the income-based model.
This “downside protection” ensures that your student debt never overwhelms your budget. If you never reach the income threshold, you may never have to repay the funding, depending on the specific contract terms.
According to Earnest.com, as of January 2025, Earnest offers protections similar to other top-tier private lenders but requires proactive management. If you face financial difficulty, you can apply for forbearance, which allows you to pause payments for short periods (typically up to 12 months total over the life of the loan).
However, during forbearance, interest usually continues to accrue, increasing your total debt. Additionally, missed payments on an Earnest loan will negatively impact your credit score and your cosigner’s credit score. While Earnest is flexible, the obligation to pay remains absolute.
Application process: How to apply for each option
Applying for these loans requires different documentation and preparation. Here is what to expect.
- Check Your Rate: You can check your eligibility and estimated rate with a soft credit pull, which does not affect your credit score.
- Add a Cosigner: If you are an undergraduate, you will likely invite a cosigner to complete their portion of the application.
- Upload Documents: Provide proof of income, employment verification, and identification.
- Hard Credit Check: Once you accept an offer, Earnest performs a hard credit inquiry.
- Certification: Earnest contacts your school to certify the loan amount.
- Create a Profile: You start by providing details about your school, major, and graduation date.
- Verify Enrollment: Edly verifies that you are enrolled in an eligible program and are an upperclassman.
- Review Terms: You receive an offer detailing the income percentage and repayment cap.
- Sign Contract: You sign the income-share agreement or loan document. No cosigner is needed.
- Funding: Funds are typically disbursed directly to the school.
The Earnest process is faster and more automated for those with clean credit files. The Edly process is more focused on academic verification and may take slightly longer depending on the school’s responsiveness.
Fees comparison: Origination, late payment, and prepayment
Unexpected fees can inflate the cost of borrowing. Both lenders are generally borrower-friendly, but there are nuances to watch for.
| Fee Type | Earnest | Edly |
|---|---|---|
| Origination Fee | None | None (typically) |
| Late Payment Fee | None | Varies by contract |
| Prepayment Penalty | None | None (but caps apply) |
Source: Earnest.com and Edly.com (Fee schedules as of January 2025)
According to Earnest.com, as of January 2025, Earnest is famous for having no fees—no origination fees, no late fees, and no prepayment penalties. This makes the Annual Percentage Rate (APR) very close to the interest rate.
Edly also avoids origination fees and prepayment penalties. However, “prepaying” an income-based contract is different from a standard loan. You typically have to pay the full repayment cap amount to exit the contract early, which means you don’t save money by paying early in the same way you do with a simple interest loan.
Which option is right for you: Decision framework
Neither option is universally “better.” The right choice depends entirely on your financial profile and risk tolerance. Use this framework to decide.
Choose Earnest if:
- You have a creditworthy cosigner (parent or guardian) willing to sign.
- You want the lowest possible cost of borrowing (assuming good credit).
- You prefer knowing exactly what your monthly payment will be 5 or 10 years from now.
- You are entering a high-income field and want to keep all your earnings rather than sharing a percentage.
Choose Edly if:
- You do not have a willing or eligible cosigner.
- You are an upperclassman in a supported major (STEM, Health, Business).
- You are worried about finding a job and want payments to automatically pause if you are unemployed.
- You prefer the safety of an income floor over the certainty of a fixed payment.
Remember, according to Betsy Mayotte, student loan expert, “In general, federal loans should be your first stop, but private loans can be appropriate when you’ve maxed out your federal eligibility.” Both Earnest and Edly are tools to use after you have accepted all federal Direct Subsidized and Unsubsidized loans.
Frequently asked questions
Yes, it is possible to combine different financing sources. Some students use Earnest for the bulk of their tuition (with a cosigner) and use Edly to cover a smaller gap if they hit a borrowing limit or want to diversify their repayment risk. However, be careful not to over-borrow, as you will have two separate monthly obligations post-graduation.
Edly typically reports to credit bureaus, meaning your payment history will impact your score. However, because there is no traditional “balance” that amortizes in the same way, the impact on your debt-to-income ratio calculation for future mortgages can sometimes be different than a standard installment loan. Always check the specific terms of your agreement.
This is where Edly shines. If you cannot find a job or your income is below the minimum threshold (the income floor), your required monthly payment is $0. You are not considered delinquent, and no late fees accrue. This protection continues until your income rises above the threshold.
According to Earnest.com, as of January 2025, Earnest does not currently offer a cosigner release program. If you apply with a cosigner, they are legally responsible for the loan until it is paid in full or until you refinance the loan into your own name with a different lender.
The choice between Earnest and Edly comes down to a trade-off between certainty and flexibility.
Earnest offers the certainty of a traditional loan: you know your rate, your payment, and your timeline. It is generally the lower-cost option for families with good credit. Edly offers the flexibility of income-based repayment: you pay only when you succeed, providing a safety net that traditional loans lack, though potentially at a higher total cost for high earners.
Key takeaways:
- Eligibility: Earnest requires credit/cosigner; Edly requires specific majors/school status.
- Risk: Earnest carries credit risk for cosigners; Edly carries career earnings risk for students.
- Protection: Edly offers automatic unemployment protection; Earnest offers standard forbearance.
Before signing any agreement, compare your offers side-by-side to see which math works best for your future.
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References and resources
- Earnest Official Website – For current rates and eligibility criteria.
- Edly Official Website – For program details and income share terms.
- StudentAid.gov – The primary source for all federal student loan information.
