Fitch Downgrades EduCap-Trust Indenture June 1, 2004

NEW YORK--()--Fitch Ratings downgrades the subordinate note issued by EduCap-Trust Indenture dated June 1, 2004 to 'B' from 'A'. The Rating Outlook for the subordinate note has been revised to Negative from Stable. Fitch used its 'Global Structured Finance Rating Criteria', and 'Rating U.S. Federal Family Education Loan Program Student Loan ABS' to review the ratings.

The downgrade is driven by the under-collateralization of the note and little likelihood that the trust regains parity due to its unique cost feature.

The Class B auction-rate note is being paid interest based on the net loan rate. As per the Indenture the net loan rate is calculated based upon the actual return on the student loans in the trust minus losses realized on the student loans and administrative expenses as determined by the issuer on the last day of each calendar year. This timing mismatch creates negative excess spread for the deal despite the net loan rate feature, and causes the parity ratio to decline. As of the December 31, 2012 reporting period total parity is at 99.78%. Fitch thinks it is unlikely that the trust will be able to build up parity above 100% given this cost feature.

Fitch has taken the following rating actions:

EduCap-Trust Indenture dated June 1, 2004:

--Series 2004-1 B Downgrade to 'B' from 'A'; Revise Outlook to Negative from Stable.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (June 6, 2012);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria'(April 3, 2012).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=675202

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Contacts

Fitch Ratings
Primary Analyst
Jenny Ovalle, +1-212-908-0849
Associate Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations, New York
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com
Elizabeth Fogerty, +1-212-908 0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Jenny Ovalle, +1-212-908-0849
Associate Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations, New York
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com
Elizabeth Fogerty, +1-212-908 0526
elizabeth.fogerty@fitchratings.com