Fitch Affirms SLC Student Loan Trust 2005-2; Outlook Stable
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of 100% of Federal Family Education Loan Program (FFELP) loans with guaranties provided by 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 at 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization, excess spread and for the class A notes, subordination provided by the class B notes. As of the August 2015 report, the total parity is at its release level of 100.00% and senior parity is at 104.49%. The trust has met the cash release level and is currently releasing cash.
Adequate Liquidity Support: Liquidity support is provided by a reserve account which is equal to the greater of 0.25% of the outstanding notes, and $1,515,458.
Satisfactory Servicing Capabilities: Day-to-day servicing is provided by Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.), In Fitch's opinion, it is an acceptable servicer of FFELP student loans.
Fitch reviewed SLC Student Loan Trust 2005-2 using its existing and proposed FFELP ABS criteria, listed below.
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 CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following ratings:
SLC Student Loan Trust 2005-2 notes:
--Class A-2 at 'AAAsf'; Outlook Stable;
--Class A-3 at 'AAAsf'; Outlook Stable;
--Class A-4 at 'AAAsf'; Outlook Stable;
--Class B at 'Asf'; Outlook Stable.