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TMCNet:  Fitch Maintains Negative Watch on NJ Higher Ed Student Assistance Auth 2010-FFELP Trust Sr Notes

[March 04, 2014]

Fitch Maintains Negative Watch on NJ Higher Ed Student Assistance Auth 2010-FFELP Trust Sr Notes

NEW YORK --(Business Wire)--

Fitch Ratings maintains the Rating Watch Negative on the 'AAAsf' senior notes issued by New Jersey Higher Education Student Assistance Authority 2010-FFELP Trust.

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.

Rating Watch Negative:

'AAAsf' rated tranches of U.S. FFELP student loan ABS (News - Alert) are maintained on Rating Watch Negative following the revision of the U.S. sovereign rating on Oct. 15, 2013.

Sufficient Credit Enhancement:

Credit enhancement is provided by overcollateralization and excess spread. As of December 2013, senior and total parity is at 110.23%. Cash is being released from the trust given the trust has reached its release level threshold of 110% total parity.

Adequate Liquidity Support:

Liquidity support is provided by a debt service reserve fund where the balance is determined as the greater of 1% of the outstanding notes and $500,000.

Acceptable Servicing Capabilities:

PHEAA and SLM are the servicers who are responsible for the day-to-day servicing of this trust. In Fitch's opinion, both of these entities are acceptable servicers of FFELP student loans.

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 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 upgrads.

Fitch has taken the following rating actions:

New Jersey Higher Education Student Assistance Authority 2010-FFELP Trust:

--Class A-1 note at 'AAAsf'; Rating Watch Negative maintained;

--Class A-2 note at 'AAAsf'; Rating Watch Negative maintained;

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

Applicable Criteria and Related Research:

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

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (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 -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=822452

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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