Sallie Mae vs Edly: Private student loans compared

Sallie Mae generally suits borrowers or cosigners with strong credit seeking traditional fixed or variable rate loans with predictable payments, while Edly’s income-share agreement (ISA) model often fits students with limited credit history or income uncertainty who prefer payments tied directly to post-graduation earnings. Choosing between them requires understanding two fundamentally different ways to pay for college.

For many families and students, the gap between federal financial aid and the actual cost of attendance requires additional funding. Navigating the private market can be confusing, especially when comparing a household name like Sallie Mae against a newer, alternative financing provider like Edly. You’ll learn how each option works, who qualifies, what they cost, and which fits your financial profile.

It is crucial to note that these options represent two distinct financial products: a traditional private student loan versus an income-share agreement. While both provide upfront capital for tuition and expenses, the repayment obligations function differently. Before applying for either, students should always exhaust federal student loans, which offer protections and forgiveness programs that private options generally do not.

Understanding the two financing models

To make an informed decision, you must first understand the structural difference between a traditional private student loan and an income-share agreement (ISA). This fundamental distinction dictates how you repay the money and how much you will ultimately pay.

Traditional private student loans (the Sallie Mae model)
This is the standard borrowing model most people recognize. You borrow a specific amount of money (principal), and the lender charges an interest rate (fixed or variable). Repayment typically begins after a grace period following graduation. Your monthly payment is determined by the interest rate, the loan balance, and the repayment term (e.g., 10 or 15 years). The total cost is the principal plus the accrued interest. If you pay it off early, you usually save money on interest.

Income-share agreements (the Edly model)
An ISA is not a loan in the traditional sense. Instead of an interest rate, you agree to pay a fixed percentage of your future gross income for a set period. Repayment only begins if your income exceeds a specific minimum threshold. If you earn a high salary, your payments increase (up to a “cap”). If you earn less or lose your job, payments decrease or pause automatically. The total cost depends entirely on your future earnings rather than an interest rate.

Risk profiles
With a traditional loan, the risk lies primarily with the borrower; you owe the monthly payment regardless of your employment status. With an ISA, the risk is shared. The funder accepts that they may receive less money if the student’s career doesn’t go as planned, but they also stand to gain more if the student becomes a high earner.

At-a-glance comparison: Sallie Mae vs Edly

If you are looking for a quick way to determine which path aligns with your financial situation, this comparison highlights the core differences between the two providers. This table assumes you have already explored federal aid options.

Source: Sallie Mae and Edly product disclosures (as of October 2024).

Which column fits you?
If you or your cosigner have strong credit and you want to know exactly what your monthly bill will be five years from now, Sallie Mae offers that stability. If you are an undergraduate with no credit history, no available cosigner, and you want to ensure your payments never overwhelm your paycheck, Edly provides a safety net against low earnings.

Before proceeding with private financing, ensure you understand the protections available through the federal government. Learn more about federal vs. private loans here.

Company overviews: Sallie Mae and Edly

Understanding the background of these companies helps establish their credibility and their approach to funding education.

Sallie Mae
According to Sallie Mae’s corporate history, the company is the largest and most well-known private student lender in the United States. Originally created as a government-sponsored enterprise in 1972, it became a fully private, publicly traded corporation in 2014. They offer a comprehensive suite of lending products, covering undergraduate and graduate degrees, MBA programs, medical and dental school, and career training. Because of their size and history, they operate on a traditional banking model, focusing on creditworthiness and standard repayment schedules.

Edly
As reported by Edly, the company is a newer entrant to the higher education finance space, founded in 2019. It positions itself as an innovative alternative to traditional debt, specifically designed to address the “cosigner gap”—the difficulty many students face in securing loans because they lack credit history. Edly functions as a marketplace connecting students with investors who fund their education in exchange for a share of future income. Unlike Sallie Mae, which lends to students at almost any accredited institution, Edly works with a specific network of partner schools and high-outcome programs, limiting its availability but tailoring its risk assessment to the student’s potential rather than their past credit.

While Sallie Mae represents the established, broad-market approach to lending, Edly represents a niche, outcomes-focused approach. This difference in philosophy directly impacts who they are willing to fund.

Eligibility requirements: Sallie Mae vs Edly

The most significant practical difference between these two options is who can actually get approved. Sallie Mae looks at financial history, while Edly looks at educational potential.

Sallie Mae eligibility
Sallie Mae operates like a traditional bank. Approval is heavily dependent on credit scores and debt-to-income ratios. Because most college students have thin credit files and little 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.”

• Credit score: According to Sallie Mae’s eligibility requirements as of October 2024, approval generally requires good to excellent credit (typically mid-600s or higher).
• Cosigner: Highly recommended for undergraduates to secure approval and lower rates.
• Enrollment: Available to students at thousands of eligible degree-granting institutions.
• Citizenship: U.S. citizens and permanent residents; international students are eligible with a U.S. citizen cosigner.

Edly eligibility
Edly does not rely on FICO scores. Instead, they underwrite based on the “ROI” of the degree—meaning they fund students in majors and schools that historically lead to good jobs.

• Credit score: No minimum credit score required; approval is not credit-based.
• Cosigner: Not required. This is a major differentiator for students without family financial backing.
• Enrollment: LIMITED availability. You must attend an Edly partner school or program. If your school isn’t on their list, you cannot apply.
• Citizenship: U.S. citizens, permanent residents, and DACA recipients (at partner schools).
• Income threshold: According to Edly’s ISA terms as of October 2024, you must expect to earn above a certain amount (often $30,000+) to trigger repayment, though this is a repayment term rather than an application requirement.

Source: Sallie Mae and Edly eligibility guidelines (as of October 2024).

Costs and rates: Sallie Mae vs Edly

Calculating the cost of borrowing is straightforward with a loan but variable with an ISA. Here is how the math works for each.

Sallie Mae cost structure
Sallie Mae uses interest rates to determine cost. According to Sallie Mae’s rate disclosures as of October 2024, their variable rates are 3.87% - 16.50%¹ APR, and fixed rates are 2.89% - 17.49%^{1 APR. The rate you receive depends on your (or your cosigner’s) creditworthiness.}

• Fees: Sallie Mae charges no origination fees and no prepayment penalties. Late fees may apply.
• Discounts: A 0.25% interest rate reduction is available for enrolling in auto-debit.
• Predictability: With a fixed-rate loan, you know exactly what the total cost will be from day one.

According to Mark Kantrowitz, financial aid expert, “Private loans can offer variable interest rates, which may be lower than federal fixed rates initially,” though borrowers should be aware that variable rates can rise over time.

Edly cost structure
According to Edly’s ISA terms as of October 2024, Edly charges no interest. Instead, you pay a percentage of your gross income—typically between 2% and 15%—for a set number of months.

• Income share: The specific percentage is determined by your school, program, and funding amount.
• Minimum income threshold: If you earn less than the threshold (typically around $30,000), your monthly payment is $0.
• Payment cap: To prevent high earners from overpaying, Edly includes a “cap.” You will never pay more than this amount (often 1.5x to 2.5x the funded amount), regardless of how high your salary goes.
• Total cost: This is variable. If you land a high-paying job immediately, you might hit the payment cap quickly, potentially paying more than a traditional loan. If your income is modest, you might pay less than the principal amount.

Source: Sallie Mae and Edly product terms (as of October 2024).

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Loan amounts and repayment terms

Knowing how much you can borrow and how long you will be paying is essential for financial planning.

Sallie Mae limits and terms
According to Sallie Mae’s loan terms as of October 2024, Sallie Mae offers high borrowing limits, making them a common choice for covering the entire gap left after financial aid.

• Loan amounts: You can borrow from a minimum of $1,000 up to 100% of the school-certified cost of attendance (tuition, room, board, books, and fees).
• Aggregate limits: There are lifetime borrowing limits based on the type of degree, but they are generally high enough to cover most education costs.
• Repayment terms: Borrowers typically choose terms between 5 and 15 years.
• In-school payments: You can choose to defer payments until after graduation, pay interest-only while in school, or make a fixed $25 monthly payment to keep interest in check.

Edly funding and terms
Edly funding is often more specific and may not cover full living expenses depending on the partnership agreement.

• Funding amounts: According to Edly terms as of October 2024, amounts vary significantly by partner school. Funding is often capped at tuition costs or specific limits set by the program (e.g., $10,000 or $15,000 per year), though some programs allow more.
• Repayment term: The term is defined by the number of required payments (e.g., 48 monthly payments). The clock only ticks when you are earning above the threshold.
• Maximum duration: There is usually a “window” (e.g., 10 years). If you haven’t made all required payments by the end of the window due to low income, the remaining obligation is typically cancelled.

Unique features and benefits

Beyond the math, both lenders offer features designed to make repayment easier or more flexible.

Sallie Mae features
According to Sallie Mae’s borrower benefits as of October 2024, Sallie Mae’s most valuable feature for families is the Cosigner Release. According to Mark Kantrowitz, financial aid expert, “Cosigner release is a valuable feature offered by some private lenders, rewarding responsible repayment.”

• Cosigner release: Borrowers can apply to release their cosigner from the loan obligation after making 12 consecutive on-time principal and interest payments and meeting credit requirements.
• Study & career support: Borrowers get free access to Chegg Study for 4 months and career coaching services.
• Hardship options: While not as generous as federal loans, Sallie Mae offers forbearance options for borrowers facing temporary financial difficulties, though interest continues to accrue.

Edly features
Edly’s primary benefit is built-in Downside Protection.

• No cosigner needed: This grants financial independence to students who cannot or do not want to involve family members.
• Automatic adjustments: You do not need to apply for forbearance if you lose your job. If your verified income drops below the threshold, payments stop automatically.
• Income floor: According to Edly’s ISA terms as of October 2024, the guarantee that you will not owe money if you are earning a low wage (e.g., under $30,000) provides peace of mind for students entering competitive or lower-paying fields.

Which option is right for you

Deciding between Sallie Mae and Edly usually comes down to your credit profile and your risk tolerance. Use this framework to guide your choice.

Sallie Mae is likely the better fit if:

• You or your cosigner have strong credit (FICO 670+).
• You want to lock in a specific interest rate and know exactly when you will be debt-free.
• You expect your post-graduation income to be high enough to comfortably cover fixed monthly payments.
• You are attending a school that is not in Edly’s partner network.
• You need to borrow the full cost of attendance, including living expenses.

Edly may be the better fit if:

• You do not have a creditworthy cosigner and cannot qualify for traditional loans.
• You are attending an eligible Edly partner school or program.
• You are worried about finding a job immediately after graduation and want payments to stay at $0 until you are employed.
• You prefer the flexibility of payments that scale down if your income drops.

Decision checklist:

1. Exhaust federal aid: Have you maximized Direct Subsidized and Unsubsized loans? Check federal options first.
2. Check school eligibility: Is your school an Edly partner? If not, Edly is off the table.
3. Assess credit: Do you have a willing cosigner with good credit? If yes, Sallie Mae likely offers a lower effective cost. If no, Edly is a strong alternative.
4. Analyze career risk: Is your starting salary predictable? If it varies wildly (e.g., commission-based sales, arts), Edly’s income protection is valuable.

Application process comparison

The application experience differs between the automated, credit-centric approach of Sallie Mae and the program-centric approach of Edly.

Applying with Sallie Mae
The process is fast and fully digital. You can check your rate with a “soft pull” that does not affect your credit score. If you proceed, you will need to upload IDs, provide cosigner information, and verify school enrollment. Approval can often happen in minutes, though school certification takes longer. Funds are sent directly to the school.

Applying with Edly
You begin by creating an account on the Edly platform to see if your program is eligible. Instead of focusing on your FICO score, Edly verifies your enrollment in a qualifying program. This may require uploading transcripts or program acceptance letters. The process can take longer than a traditional automated loan approval because it relies on program verification. Funding disbursement schedules depend on the specific agreement with your school.

Frequently asked questions

Yes. Edly ISAs are designed specifically for students without cosigners. Approval is based on your school and program outcomes rather than your credit history or family finances.

Yes. Sallie Mae allows borrowers to apply to release their cosigner after making 12 consecutive on-time principal and interest payments, provided the borrower meets credit criteria on their own.

Sallie Mae uses traditional interest rates, while Edly charges a percentage of income. If you earn a high salary, the total amount paid to Edly (up to the cap) could exceed the cost of a traditional loan. If you earn less, Edly could cost less.

No. Edly is limited to a specific network of partner schools and high-outcome programs. You must check their website to see if your institution is eligible.

Sallie Mae offers forbearance and deferment options for financial hardship, which pause payments temporarily. However, interest usually continues to accrue. You must contact them immediately if you cannot pay.

Technically, ISAs are income-share contracts, not traditional loans. However, they are a form of education financing that creates a legal obligation to pay money in the future. They generally do not carry interest rates but do have payment caps.

Choosing between Sallie Mae and Edly is a choice between stability and flexibility. Sallie Mae offers the traditional route: widely available, predictable costs, and rewards for good credit. Edly offers the alternative route: accessible without a cosigner, income-protected, but limited to specific schools.

Key takeaways:

• Sallie Mae is best for borrowers with cosigners who want predictable monthly payments and potentially lower total costs.
• Edly is best for students without cosigners or those who want insurance against low post-graduation earnings.
• School eligibility is the first filter; Edly only works with partner programs, while Sallie Mae works with most colleges.
• Federal first: Always exhaust federal student loans before applying to either company. Review federal loan limits here.

Your next steps:
If you are considering an ISA, check Edly’s website to confirm your school is eligible. If you prefer a traditional loan, you can check your rate with Sallie Mae in minutes without hurting your credit score. To ensure you are getting the best deal, compare multiple lenders side-by-side.

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References and resources

For further research and to manage your application process, utilize these resources:

• Sallie Mae official site: Direct access to loan products and rate calculators.
• Edly official site: List of eligible partner schools and ISA terms.
• StudentAid.gov: The authoritative source for all federal loan and grant information.
• College finance guides:
  • Federal vs private student loans
  • Income-driven repayment options
  • Private student loans hub