Fitch Affirms EdLinc Student Loan Funding Trust 2012-1; Outlook Stable

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the EdLinc Student Loan Funding Trust 2012-1 class A senior student loan asset-backed note at 'AAAsf'. In addition, Fitch affirms the subordinate class B note at 'AAsf'. The Rating Outlook for both notes remains Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The current U.S. sovereign rating is 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement (CE): While both the senior and subordinate notes will benefit from overcollateralization and future excess spread, the senior note also benefits from subordination provided by the class B note. As of August 2015, senior parity ratio is 124.42% (19.63% CE) and the total parity is 110.15% (9.21% CE). The trust is a turbo structure therefore no cash is released until the note is paid in full.

Adequate Liquidity Support: Liquidity support is provided by a reserve account that is equal to the greater of 0.25% of the pool balance and $500,000.

Satisfactory Servicing Capabilities: Xerox Education Services, Inc., formerly ACS Education Services, Inc. (XEROX-ES), services 92.21% of the EdLinc 2012-1 portfolio, and Great Lakes Educational Loan Services, Inc. (GLELSI) services the remaining 7.79%. Fitch believes both XEROX-ES and GLELSI to be acceptable servicers of FFELP student loans.

RATING SENSITIVITIES

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 build-up of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

DUE DILIGENCE USAGE

Fitch was not provided due diligence information from any third parties relating to the EdLinc Student Loan Funding Trust 2012-1.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

EdLinc Student Loan Funding Trust 2012-1 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749950

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=992530

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=992530

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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View source version on businesswire.com: http://www.businesswire.com/news/home/20151019006172/en/

Fitch Ratings
Primary Analyst
Paul Jiang
Associate Director
+1-212-908-9120
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson
Kevin Corrigan
Senior Director
+1-212-908-9156
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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