Funding U vs Edly: Which alternative lender fits your needs?

For students and families bridging the gap between federal aid and the total cost of college, the choice often comes down to structure: Do you want the predictability of a traditional loan or the flexibility of an income-share agreement? Funding U is best for students with strong academic records who need a traditional private student loan without a cosigner. Edly is best for students in specific career-focused majors who prefer an income-share agreement (ISA), where repayment is tied directly to future earnings rather than a fixed interest rate.

Both lenders operate differently from big banks. They focus less on credit history and more on academic potential, making them strong contenders for students who cannot find a creditworthy cosigner—a common barrier in the private market. However, their repayment models are fundamentally different. Funding U operates like a standard loan with principal and interest, while Edly takes a percentage of your post-graduation salary for a set period.

This guide covers the critical differences between these two alternative financing options. You will learn about their specific eligibility requirements, how their costs compare over the long term, and the distinct repayment protections each offers. By understanding these trade-offs, you can select the financing path that aligns best with your career goals and financial comfort level.

Context: Understanding alternative private loan options

Before comparing terms, it is vital to understand why these lenders exist and where they fit in the financial aid landscape. Most students should follow a “federal first” strategy. You should always exhaust free money (scholarships and grants) and federal student loans before considering private options. Federal loans offer standardized rates and protections that private lenders generally cannot match. For more details on these foundational steps, review our FAFSA guide and federal loans guide.

However, federal loan limits often fall short of the total cost of attendance. This creates a “funding gap.” Traditional private lenders usually require a creditworthy cosigner to bridge this gap, which many students do not have. This is where alternative lenders like Funding U and Edly step in. They utilize “outcome-based lending,” meaning they evaluate a student’s potential to succeed—looking at GPA, major, and progress toward graduation—rather than just FICO scores.

According to Mark Kantrowitz, financial aid expert, “Private loans can be a good option when federal loans don’t cover the full cost of attendance.” These alternative lenders serve that specific need but use different vehicles to do it. Funding U offers a Traditional Private Loan: you borrow a set amount and pay it back with interest. Edly facilitates Income-Share Agreements (ISAs): you receive funding in exchange for a percentage of your future gross income for a fixed number of months. Understanding this structural difference is the most important step in your decision process.

Quick comparison: Funding U vs Edly at a glance

To help you quickly assess which model fits your financial plan, the table below outlines the core features of each lender. Note the distinct difference in how costs are calculated and how repayment is structured.

Source: Funding U and Edly terms pages, as of January 2025.

Eligibility requirements: Funding U vs Edly

Because these lenders do not rely on cosigners, they have strict eligibility criteria focused on the student’s academic performance and school quality. However, they look for different indicators of success.

Funding U focuses on academic diligence and progression. They essentially bet on the student’s likelihood of graduating and finding employment. According to Funding U’s official website, to qualify, borrowers typically need:

• Academic Standing: A minimum GPA is usually required (often 2.5 or higher). They look for an upward trend in grades and consistent enrollment.
• School Status: You must attend one of their eligible Title IV, 4-year, non-profit colleges. They do not lend to students at for-profit schools or community colleges.
• Residency: Borrowers must be U.S. citizens or permanent residents (DACA students with a cosigner may be eligible in some cases, but the core product is no-cosigner).
• Credit History: While they do not require a high credit score or a long history, they do check for “bad” credit. Accounts in collections or defaults may disqualify an applicant.

Edly’s model is an investment in your future career. Consequently, as reported by Edly, they focus heavily on what you are studying and the return on investment (ROI) of your degree.

• Program and Major: Eligibility is often restricted to majors with strong employment outcomes, such as STEM (Science, Technology, Engineering, Math), nursing, healthcare, and business. Liberal arts majors may find it harder to qualify.
• School Level: Edly generally focuses on juniors and seniors who are close to graduation, as they are closer to entering the workforce and making payments.
• Citizenship: U.S. citizens and permanent residents are eligible. International students may qualify depending on specific program partnerships.
• Underwriting Logic: Instead of looking at past credit, Edly calculates an expected starting salary for your major. If the data suggests you will earn enough to support the income share, you are more likely to be approved.

Loan amounts and coverage: What each lender offers

Once you determine eligibility, the next step is assessing if the lender can provide enough capital to cover your funding gap. Neither lender is designed to cover the entire cost of attendance (COA) on their own; they are gap financing solutions.

According to Funding U, they typically offer loans ranging from $3,001 to $20,000 per academic year. This range is designed to cover the “last mile” of funding—tuition balances, books, or room and board gaps that remain after federal aid. The aggregate limit (the total you can borrow over your college career) is generally capped, often around $35,000 to $40,000, to prevent students from taking on unmanageable debt loads. Funds are disbursed directly to the school to pay for certified educational expenses.

As reported by Edly, funding amounts vary significantly based on your projected salary and the specific terms of the ISA marketplace. Typical funding ranges from $2,500 to $15,000 per year, though students in high-ROI fields may qualify for up to $25,000. Like traditional loans, Edly funds can cover tuition, housing, and school fees. However, because the repayment obligation is heavy (a percentage of gross income), Edly limits the total funding to ensure the monthly bite out of your future paycheck remains reasonable.

As shown in the comparison above, Funding U offers a slightly more standardized approach to limits, whereas Edly’s limits are dynamic based on the “value” of the degree being pursued.

Cost comparison: Interest rates vs income share

Comparing costs between a loan and an ISA is difficult because the math works differently. With a loan, you pay for time (interest). With an ISA, you pay for success (income share).

According to Funding U, they charge a fixed interest rate. As of January 2025, fixed APRs are 7.99% - 13.49%, depending on the 10-year Treasury note and the student’s academic profile. Because the rate is fixed, you can calculate exactly how much you will pay over the life of the loan before you sign.

Example: A $10,000 loan at 10% interest repaid over 10 years would cost approximately $132 per month, with a total repayment of roughly $15,850.

Edly does not charge an interest rate. Instead, as reported by Edly, you agree to pay a percentage of your gross income (e.g., 4% to 10%) for a set number of payments or months.

The Cap: To protect high earners from paying too much, ISAs include a “repayment cap” (often 2.0x or 2.5x the borrowed amount). You will never pay more than this cap.

Example: If you receive $10,000 and agree to pay 5% of your income, and you land a job paying $60,000, you pay $3,000 that year ($250/month). If your salary jumps to $100,000, you pay $5,000 that year ($416/month).

According to Jason Delisle, higher education policy expert, “The private market can and does innovate — offering options federal loans don’t, such as variable rates or targeted underwriting.” This innovation creates a clear cost trade-off. If you graduate and land a very high-paying job immediately, an ISA through Edly will likely be more expensive than a Funding U loan because your payments scale up with your success. However, if you have a modest starting salary, the ISA payments may be lower and more manageable than the fixed monthly bill from a traditional loan.

Repayment terms and borrower protections

The safety nets provided by these lenders differ drastically. Your choice should depend on how much risk protection you want against potential unemployment or low wages.

Funding U follows a traditional structure familiar to most families.

• Grace Period: You typically get a 6-month grace period after graduation before full principal and interest payments begin.
• In-School Payments: According to Funding U, borrowers often make small interest-only or flat payments (e.g., $20/month) while in school to lower the final cost.
• Hardship: If you lose your job, Funding U offers forbearance options where you can pause payments temporarily. However, interest usually continues to accrue during this time, increasing the total cost.

Edly’s ISA model offers built-in insurance against life’s uncertainties.

• Income Threshold: This is the most significant protection. As reported by Edly, if your income falls below a certain amount (typically around $30,000), you owe $0 that month. These months generally do not count toward your required number of payments, extending the term, but they protect your cash flow.
• Term Limit: ISAs have a maximum window (e.g., 8-10 years). If you haven’t made all your payments by the end of this window due to low income, the remaining obligation is often waived.
• Unemployment: If you are unemployed, payments stop automatically because your income is zero. There is no need to apply for forbearance or prove hardship in the same way; it is a feature of the contract.

For more on managing payments, review our student loan repayment guide.

Application process: Traditional loan vs ISA

Applying for these products requires different documentation. Since neither relies on a cosigner’s credit score, the burden of proof shifts to your academic records.

According to Funding U’s official website, the process is rigorous regarding academic verification.

1. Pre-qualification: You submit basic info to see estimated rates without a hard credit check.
2. Documentation: You must upload an unofficial transcript immediately. They analyze your GPA, course load, and credit hours earned.
3. Underwriting: The team reviews your history to ensure you are on track to graduate on time.
4. School Certification: Once approved, Funding U contacts your school’s financial aid office to verify your enrollment and financial need before sending funds.

As reported by Edly, the process feels more like a marketplace evaluation.

1. Account Creation: You create a profile listing your school, major, and graduation date.
2. Offer Generation: Edly’s algorithm estimates your future earnings and presents ISA offers with different income percentages and caps.
3. Verification: You provide proof of enrollment and major. Because eligibility relies on your specific program (e.g., Chemical Engineering vs. Biology), changing majors can impact your funding or eligibility.
4. Contract Signing: You sign an ISA contract, which is legally distinct from a promissory note for a loan.

Decision framework: Choosing between Funding U and Edly

Making the final choice requires an honest assessment of your career path and risk tolerance. Use this framework to decide which lender aligns with your situation.

• You value predictability. You want to know exactly how much you owe and exactly when you will be debt-free (e.g., in 10 years).
• You are confident in your income. You expect a starting salary that can comfortably cover a fixed monthly payment of $200-$400.
• You want to build credit. Traditional installment loans are excellent for building a credit history, which helps when renting an apartment or buying a car later.
• Your major is not high-income. If you are in a major that Edly doesn’t fund, Funding U’s broader academic criteria may be the better fit.

• You want downside protection. You are worried about graduating into a recession or struggling to find a job immediately. The $0 payment protection is valuable peace of mind.
• You are in a high-growth field. You qualify for their most competitive terms based on a STEM or healthcare major.
• You are debt-averse. The idea of a fixed debt balance stressing you out is unappealing, and you prefer the idea of “sharing success” only when you have the money.
• You have maxed out other options. You need a solution that strictly looks at program ROI rather than credit history.

Frequently asked questions

Yes. Funding U is specifically designed as a no-cosigner student loan. They evaluate your academic progress and potential rather than your credit history or a parent’s creditworthiness, making them a primary option for students who cannot find a cosigner.

If you have an ISA through Edly and are unemployed (or earning below the income threshold, typically around $30,000), your monthly payment is $0. These months generally do not count toward your required number of payments, but they provide immediate relief without penalty fees.

It depends on your future income. If you earn a high salary, an Edly ISA will likely cost more than a Funding U loan because your payments scale with your income. If you earn a modest salary, the ISA might be cheaper or comparable. Funding U offers a fixed cost that does not change regardless of how much you earn.

Yes. You can refinance a Funding U loan later if you qualify for better rates. Edly ISAs also allow you to “buy out” the contract early, but this usually requires paying the full payment cap amount, which can be expensive. Always check the specific prepayment terms before signing.

No. Both lenders have specific networks of eligible schools. Funding U works with eligible 4-year non-profit colleges. Edly works with specific schools and programs that have proven ROI data. You must check their websites to confirm your school is on their approved list.

Choosing between Funding U and Edly is a choice between certainty and flexibility. Funding U offers the structure of a traditional loan without the barrier of a cosigner, making it ideal for students who want a predictable path to being debt-free. Edly offers the safety net of an income-share agreement, protecting you from payments during periods of low income but potentially costing more if your career takes off.

Key takeaways:

• Funding U is a traditional private loan: fixed payments, interest rates, and a set timeline. Best for stability.
• Edly is an ISA: payments are a percentage of income. Best for downside protection and variable income paths.
• Both options are strictly for bridging the gap; always exhaust federal student loans first.
• Eligibility for both relies on your academic future (grades or major) rather than your credit past.

Before signing any agreement, calculate your potential monthly payments under different salary scenarios. Ensure you are comfortable with the obligation you are taking on. If you are ready to move forward, compare rates and explore your private loan options to find the best fit for your education.

References and resources

• Funding U Official Website – Direct source for loan products, eligibility, and application portal.
• Edly Official Website – Marketplace for income-share agreements and tuition funding.
• StudentAid.gov – The official source for all federal financial aid, FAFSA, and loan information.
• CFPB Paying for College – Tools and resources for comparing financial aid offers and understanding student loans.