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TMCNet:  Fitch Maintains Rating Watch on Sr Notes & Upgrades Sub Notes for College Loan Corp Trust 2005-2

[December 17, 2013]

Fitch Maintains Rating Watch on Sr Notes & Upgrades Sub Notes for College Loan Corp Trust 2005-2

NEW YORK --(Business Wire)--

Fitch Ratings maintains the Rating Watch Negative on the senior notes currently rated 'AAAsf' and upgrades the subordinate notes to 'A+sf' from 'A-sf' issued by College Loan Corporation Trust Series 2005-2. The Rating Outlook remains Stable for the subordinate notes.

Key Rating Drivers

High Collateral Quality: The trust collateral is comprised of 100% of 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 at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED).

Negative Rating Outlook Maintained: On October 16, Fitch placed 776 ABS (News - Alert) FFELP student loans transactions that are rated at 'AAAsf' on Rating Watch Negative (RWN). This rating action is tied to the sovereign rating of the U.S. being placed on RWN October 15, 2013, by Fitch in relation to the U.S. debt ceiling agreement and to the creditworthiness of the United States.

Sufficient Credit Enhancement: Cash flows scenarios for the class A and B notes were satisfactory under Fitch's stresses. Fitch calculated senior and total parity is 109.76% and 100.83%, respectively, although credit is only given up to the release level of 100.25%. Total credit enhancement (CE) is provided by overcollateralization (OC), excess spread and, for the class A notes, subordination provided by the class B notes.

Liquidity support is provided by a reserve account (0.25% of outstanding notes or 0.15% of the initial balance).

Acceptable Servicing Capabilities: Xerox and Great Lakes are servicers of this trust. In Fitch's opinion, all servicers are 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 beyondFitch'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.

Fitch has taken the following rating actions:

College Loan Corporation Trust Series 2005-2

--Class A-3 'AAA'; Rating Watch Negative maintained;

--Class A-4 'AAA'; Rating Watch Negative maintained;

--Class B upgraded to 'A+sf' from 'A-sf'; Outlook Stable.

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' dated May 24, 2013;

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' dated May 17, 2013.

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria - Effective Apr. 7, 2011 to Apr. 3, 2012

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=616766

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=812153

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


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