KEY RATING DRIVERS
Collateral Quality: The loans under the facility are comprised of 88% of Federal Family Education Loan Program (FFELP) loans and approximately 12% private student loans. The FFELP collateral benefits from the guarantees provided by the transaction's eligible guarantors and at least 97% reinsurance of principal and accrued interest provided by the
Credit Enhancement: The rating on the subordinate note is downgraded due to the insufficient credit enhancements to cover the applicable risk factor stresses. In addition, the trust has not been able to build up parity since the deal's inception. As of
Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to 0.50% of the total note balance.
Servicing Capabilities: National Education is the Master Servicer and will be responsible for servicing approximately 90% of the FFELP collateral pool and 100% of the private student loan collateral pool. The remaining 10% of FFELP collateral is serviced by ACS, COSTEP, ESA,
Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades. As Fitch's base case private loans default proxy is derived primarily from historical collateral performance, actual performance may differ from the expected performance, resulting in higher loss levels than the base case. This will result in a decline in credit enhancement and remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.
Fitch has taken the following rating action:
--Class B downgraded to 'B-sf' from 'BBsf'; subsequently withdrawn
Additional information is available at 'www.fitchratings.com'.
--'Global Structured Finance Rating Criteria' (
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (
--'U.S. Private Student Loan ABS Criteria' (
U.S. Private Student Loan ABS Criteria
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
Global Structured Finance Rating Criteria
Source: Fitch Ratings
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