Edly IBR Student Loan Review: Pros, Cons, And Alternatives

Edly is a private student loan lender that offers income-based student loans, sometimes called income-sharing agreements.

Each year, college graduates face increasing student debt loads as they enter the workforce. However, these graduates are armed with a degree that's likely to translate to higher earnings throughout their careers.

Student loan borrowers who take out loans but are unable to finish college often face even larger issues. These borrowers still must repay their student loans, but may not have a high-paying job to cover the costs. One reason students drop out of school is due to a funding gap. They're unable to cover costs with subsidized student loans, and their parents or grandparents can't take out loans on their behalf. As a result, these students can't afford to continue their education.

Edly, a private company offering Income-Based Repayment (IBR) loans, wants to create an alternative loan scheme to fund that gap. Their private IBR loans have built-in protections to adjust the loan repayment schedule to fit each borrower’s unique income limitations. Borrowers who have income that falls below $30k per year pay nothing until their earning power is restored.

The unique Edly IBR loan may sound like a good fit for students seeking private loans. However, the loans can be deceptively costly, so borrowers should understand the program before committing. Here’s what you need to know about these loans.

What Is Edly?

Edly is a private student loan platform that offers income-based repayment loan options through their banking partner, FinWise Bank, a Utah-chartered bank, Member FDIC.

The company’s goal is to create a private student loan product that allows more students to graduate from school which increases the likelihood that the borrower can repay their loans.

Edly raises funds for its loans through a private investment marketplace. Investors in the marketplace can direct their loans to certain institutions or towards certain education programs (majors). Read our review of Edly's investor options.

What Does It Offer?

Edly currently offers two income-based repayment student loans: Edly IBR No Cosigner Student Loan (for university students without a cosigner) and the Edly IBR Cosigned Student Loan (for university students with a cosigner).

Edly performs a credit check on the student for all of its products and there are FICO minimum requirements for the student borrower in the non-cosigned product, while in the cosigner product cosigners must meet minimum credit and underwriting requirements and student borrowers will have to meet the same credit requirements upon cosigner release.

Additionally, the applicant’s credit history is considered in combination with other factors including the student’s time to graduate and their potential post-graduation earnings.

Depending on their major and school, students may be able to qualify for an IBR loan through the Edly platform without a cosigner, even if they have limited credit histories. However, even if a student doesn’t qualify on their own, they may still apply with (or add) a cosigner for the Edly IBR Cosigned Student Loan product.

Income-Based Repayment Loans

Edly IBR Loans have floating payments based on a borrower’s income. If income falls below a threshold ($30k), borrowers can apply for forbearance to reduce payments to $0 (interest will continue to accrue on the loan during periods of forbearance).

While 84 in-full post-graduation loan payments are required to satisfy the student loan, borrowers have a maximum of 12 years to make those payments (for IBR No Cosigner Student Loan). However, for the Edly IBR Cosigner Student Loan, borrowers will also have to make minimal in-school payments.      

When your income rises, your payments on your IBR Loan will increase as well. Payment increases will be proportional to your income.

Loans Issued Based On Major

Rather than sheer income potential, eligible programs are determined by performance statistics, like graduation rates, job placement rates, certification exam pass rates, etc. Edly also expanded its eligible academic program list to all majors beyond STEM, business and healthcare in the Edly IBR Cosigner Student Loan.

Payments Can Be Deferred Due To Job Loss Or Low Income

If a borrower loses their job or their income falls below a $30,000 annual salary, they can request forbearance. While the borrower does not have to make payments during periods of forbearance, interest will continue to accrue on the loan (6 month lifetime maximum forbearance for the Edly IBR Cosigner Student Loan).                  

Total Payment Cap

A borrower's repayment period ends after they complete 84 post-graduation payments or repay 2.5x  of the loan amount– whichever comes first. Note that with the IBR Cosigner Student Loan there are minimal fixed in-school payments that do not count towards the 84 post-graduation payment cap.      

A borrower can choose to pay off his or her remaining loan balance at any time. But note that if you decide to pay off your loan before the end of your term, you will pay the loan balance, which accrues at the interest rate.

Are There Any Fees?

Edly borrowers will pay a 4% origination fee on their tuition amount. The Edly borrower website allows users to check specific loan terms but it doesn't offer general guidance on the average interest rate borrowers can expect to pay. The borrower may also pay late and/or NSF fees when payments are missed or late.

How Does The Edly IBR Loan Compare?

As a private student loan platfrom, Edly isn't trying to compete with subsidized federal student loans. Instead, it's trying to fund private loans that borrowers will be able to repay.

Although interest rate information is limited, the expected interest rates on the student loans through Edly would be on the high end of what traditional private lenders charge undergraduate students. But loans available through the Edly platform offer positive features designed to protect against adverse employment events. The income-based repayment plan reduces payments when income is low. And it allows borrowers to defer their loans in the event of job loss.

However, a loan through Edly is likely to be a more costly option in the long run. This is because Edly borrowers face an unusual situation when paying off their loans early. To pre-pay, borrowers must pay the “pre-payment cap.” Borrowers are able to pay their loan off early by paying their loan balance, which accrues at the interest rate listed on their Final Disclosure and IBR Note. By contrast, borrowers who take on traditional loans can refinance to a lower interest rate as soon as they qualify.

If you think that a traditional private student loan is a better option for you, you can compare our top lenders here. But if the income-based-repayment element of Edly's loans appeals to, know that other companies like Stride and offer similar products. Stride, in particular, still caps your total payment amount rather than just capping your APR. Here's a quick look at how Edly compares:

How Do I Apply For A Loan?

Students who want to take out a loan can start by checking their loan terms on the Edly site. The site uses a soft credit pull to provide a loan estimate, so it does not impact a borrower’s credit score.

Edly says that adverse credit history is a factor in your approval or denial (like defaults, collections accounts, bankruptcies, etc.).  A minimum credit score requirement does exist for student borrowers to apply without a cosigner And it doesn't require students to have a cosigner when they apply although students have the option to add a cosigner with the  IBR Cosigner Student Loan product. Note, the cosigner must meet credit and underwriting requirements and a minimum FICO score applies. Student borrowers must also meet the same credit and underwriting requirements upon cosigner release.     

A borrower who officially applies must provide information about their graduation date, major, and school of attendance. If a borrower is approved and certified by the school, funds will be disbursed directly to the school.    

Is It Safe And Secure?

Edly issues its loans through FinWise bank, an FDIC-insured bank. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply. Borrowers will receive a Truth in Lending Act form before they have to sign any loan forms. This protects borrowers who may be confused by the terms of an income-based repayment loan.

When you accept and are approved for a loan through the Edly platform, money is paid directly to schools, so borrowers never have to handle the money. The loan repayment platform has bank-level security, and the company has not had any reported security breaches.

How Do I Contact Edly?

Edly is headquartered in Briarcliff Manor, New York. Its street address is 555 Pleasantville Road, Suite N202, Briarcliff Manor, NY, 10510.

The company’s customer service team can be reached by phone  914-775-8299 (Monday – Friday, 8am – 7pm EST), chatbot service (9am – 5:30pm EST), or by submitting the Contact Us form.

Is It Worth It?

Generally speaking, income-share agreements tend to trick students into taking on more debt. The loans from Edly are no exception. Despite the claims of affordability and protection, borrowers are likely to be locked into a loan with double-digit interest rates for three to five years.

Of course, most of these borrowers will be able to afford to repay the loans as Edly specifically targets students with high-income potential. But whether a borrower can eventually repay the debt doesn’t reflect the quality of the debt for the borrower. With loans through Edly, you could pay up to 2.5 times on your borrowed amount.

We recommend private student loans as the last resort for college students. Scholarships, grants, savings, earnings from work, contributions from family members, and federal student loans are all better ways to fund college. Only after all those sources are exhausted should borrowers look at Edly or other private lenders.

Borrowers who consider loans through Edly should try to minimize their repayment window. If you plan to have a loan for more than three years, you'll probably do better with another lender. Even if the other lender has a higher interest rate, borrowers will likely have the option to refinance to more favorable terms after graduating.

Get a quote on an Edly IBR Loan here >>

Edly IBR Student Loan Features