Fitch Affirms All Notes of Educational Loan Company Trust I

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the senior student loan notes and the subordinate student loan note issued by Educational Loan Company Trust I 2006-1 at 'Asf' and 'CCCsf', respectively. The Rating Outlook for the senior notes remains Negative. A full list of ratings actions follows at the end of this release.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral comprises 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.

Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of February 2016, senior parity is at 111.06%, while total parity remains below par at 98.04%. The trust continues generating negative excess spread.

Liquidity Support: Liquidity support is provided by a reserve fund currently sized at $1,707,147 (1% of the bond balance, with a floor of $750,000).

Acceptable Servicing Capabilities: Day-to-day servicing is provided by Great Lakes and ACS. Both servicers have demonstrated adequate servicing capabilities.

On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014. Fitch has reviewed this transaction under both the existing and proposed criteria.

RATING SENSITIVITIES

Since the FFELP student loan ABS relies 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, basis risk, and loan extension risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults, basis shock beyond Fitch's published stresses, lower than expected payment speed, and other factors could result in future downgrades. Likewise, a buildup 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:

Educational Loan Company Trust I:

--Class A-1 at 'Asf'; Outlook Negative;

--Class A-2 at 'Asf'; Outlook Negative;

--Class A-3 at 'Asf'; Outlook Negative;

--Class B at 'CCCsf'; RE 60%.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Exposure Draft: Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 04 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874971

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

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

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 23 Jun 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1002100

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1002100

Endorsement Policy

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

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Fitch Ratings

Primary Analyst

Victoria Ohorodnyk
Associate Director

+1-212-908-0866

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Committee Chairperson

Mike Dean
Managing Director

+1-212-908-0556

or

Media Relations

Sandro Scenga, +1 212-908-0278

[email protected]

Source: Fitch Ratings