Is it possible to level up while playing with 5 people?

Every time I and my friends have played, we all have all the perks unlocked for every character for some reason, but none of us ever level up. We're all stuck at level 1.

I'm guessing it's because we have five players instead of four? Is it possible to only play with friends but still level up?

The "Kill your Friends" mode allows a player to play as the killer and invite others to their lobby to play as survivors, but no bloodpoints or ranks are rewarded in this mode. The other option for playing with friends is the "Survive with Friends" mode, which allows a premade group of survivors to join a random killer's lobby while earning ranks and bloodpoints.

There isn't a way to guarantee that survivors will play against a specific killer in the ranked modes, which is probably meant to keep players from farming bloodpoints/ranks by artificially extending the game. However, if your group of survivors and the killer queue at the same time you may be able to end up in the same lobby through luck.