Fitch Comments on Pennsylvania Higher Ed Assistance Agency 1997 Indenture Rating Agency Notification

NEW YORK--()--Fitch Ratings currently maintains ratings as listed below on the student loan revenue bonds issued under the Pennsylvania Higher Education Assistance Agency (PHEAA) indenture of trust dated as of Aug. 1, 1997, as amended and supplemented (the 1997 Trust). Consistent with its statements on policies regarding rating confirmations in structured finance transactions (Jan. 13, 2009) and student loan confirmations (May 8, 2009), Fitch is treating this request for approval as a notification.

PHEAA has requested that Fitch approve a transfer of the Broker Dealer and Market Agent function to Morgan Stanley & Co. LLC. The transfer to a single counterparty for both functions would lower fees to 2.75 basis points (bps) per annum for failed auctions and 8bps per annum for successful auctions associated with all the bonds issued under the 1997 Trust as currently detailed in the Third Amended and Restated Cash Flow Assumption Certificate and Agreement (the Agreement) between PHEAA and Manufacturers and Traders Trust Company, as trustee. The Agreement contains language that requires 'Rating Agency approval' in connection with any modification of the terms, rates or fees detailed in the Agreement.

Based on the Broker Dealer and Market Agent agreements provided, Fitch has determined that the transfer to Morgan Stanley & Co. LLC as a single counterparty for both functions will not have an impact on the existing ratings of the bonds at this time. This determination only addresses the effect of the proposed change on the current ratings assigned by Fitch to the securities listed below. This determination does not address whether the proposed changes are permitted by the terms of the transaction documents. It does not address whether the proposed changes are in the best interests of, or prejudicial to, some or all of the holders of the securities listed.

Fitch currently rates the bonds as follows:

Pennsylvania Higher Education Assistance Agency 1997 Trust Indenture Senior Class Notes

--1998-1 Class C 'AAAsf'; Outlook Negative;

--2000-1 Class F-1 'AAAsf'; Outlook Negative;

--2000-1 Class F-2 'AAAsf'; Outlook Negative;

--2000-2 Class H 'AAAsf'; Outlook Negative;

--2000-3 Class J-2 'AAAsf'; Outlook Negative;

--2000-3 Class J-3 'AAAsf'; Outlook Negative;

--2000-3 Class J-4 'AAAsf'; Outlook Negative;

--2001 Class L-1 'AAAsf'; Outlook Negative;

--2001 Class L-2 'AAAsf'; Outlook Negative;

--2002-1 Class N-1 'AAAsf'; Outlook Negative;

--2002-1 Class N-2 'AAAsf'; Outlook Negative;

--2002-3 Class R-1 'AAAsf'; Outlook Negative;

--2002-3 Class R-2 'AAAsf'; Outlook Negative;

--2002-4 Class T-1 'AAAsf'; Outlook Negative;

--2002-4 Class T-2 'AAAsf'; Outlook Negative;

--2002-4 Class T-3 'AAAsf'; Outlook Negative;

--2002-4 Class T-4 'AAAsf'; Outlook Negative;

--2002-4 Class T-5 'AAAsf'; Outlook Negative;

--2002-5 Class V-1 'AAAsf'; Outlook Negative;

--2002-5 Class V-2 'AAAsf'; Outlook Negative;

--2002-5 Class V-3 'AAAsf'; Outlook Negative;

--2002-5 Class V-4 'AAAsf'; Outlook Negative;

--2003-1 Class W-1 'AAAsf'; Outlook Negative;

--2003-1 Class W-2 'AAAsf'; Outlook Negative;

--2003-2 Class Y-1 'AAAsf'; Outlook Negative;

--2003-2 Class Y-2 'AAAsf'; Outlook Negative;

--2003-2 Class Y-3 'AAAsf'; Outlook Negative;

--2003-2 Class Y-4 'AAAsf'; Outlook Negative;

--2004-1 Class Z-1 'AAAsf'; Outlook Negative;

--2004-1 Class Z-3 'AAAsf'; Outlook Negative;

--2004-1 Class Z-4 'AAAsf'; Outlook Negative;

--2004-2 Class AA-1 'AAAsf'; Outlook Negative;

--2004-2 Class AA-2 'AAAsf'; Outlook Negative;

--2004-3 Class BB-1 'AAAsf'; Outlook Negative;

--2004-3 Class BB-2 'AAAsf'; Outlook Negative;

--2004-3 Class BB-3 'AAAsf'; Outlook Negative;

--2004-3 Class BB-4 'AAAsf'; Outlook Negative;

--2005-1 Class CC-2 'AAAsf'; Outlook Negative;

--2005-1 Class CC-3 'AAAsf'; Outlook Negative;

--2005-2 Class DD-1 'AAAsf'; Outlook Negative;

--2005-2 Class DD-2 'AAAsf'; Outlook Negative;

--2005-3 Class EE-1 'AAAsf'; Outlook Negative;

--2005-3 Class EE-2 'AAAsf'; Outlook Negative;

--2005-3 Class EE-3 'AAAsf'; Outlook Negative;

--2005-3 Class EE-4 'AAAsf'; Outlook Negative;

--2005-4 Class GG-1 'AAAsf'; Outlook Negative;

--2005-4 Class GG-2 'AAAsf'; Outlook Negative;

--2005-4 Class GG-3 'AAAsf'; Outlook Negative;

--2005-4 Class GG-4 'AAAsf'; Outlook Negative;

--2005-4 Class GG-5 'AAAsf'; Outlook Negative;

--2006-1 Class HH-1 'AAAsf'; Outlook Negative;

--2006-1 Class HH-2 'AAAsf'; Outlook Negative;

--2006-1 Class HH-3 'AAAsf'; Outlook Negative;

--2006-1 Class HH-4 'AAAsf'; Outlook Negative;

--2006-1 Class HH-5 'AAAsf'; Outlook Negative;

--2006-1 Class HH-6 'AAAsf'; Outlook Negative;

--2006-1 Class HH-7 'AAAsf'; Outlook Negative;

--2006-1 Class HH-8 'AAAsf'; Outlook Negative;

--2006-1 Class HH-9 'AAAsf'; Outlook Negative;

--2006-1 Class HH-10 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-1 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-2 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-3 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-4 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-5 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-6 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-7 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-8 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-9 'AAAsf'; Outlook Negative;

--2006-2 Class JJ-10 'AAAsf'; Outlook Negative;

--2007 Class LL-2 'AAAsf'; Outlook Negative;

--2007 Class LL-3 'AAAsf'; Outlook Negative;

--2007 Class LL-4 'AAAsf'; Outlook Negative;

--2007 Class LL-5 'AAAsf'; Outlook Negative;

--2007 Class LL-6 'AAAsf'; Outlook Negative;

--2007 Class LL-7 'AAAsf'; Outlook Negative;

--2007 Class LL-8 'AAAsf'; Outlook Negative;

--2007 Class LL-9 'AAAsf'; Outlook Negative;

--2007 Class LL-10 'AAAsf'; Outlook Negative;

--2007 Class MM-1 'AAAsf'; Outlook Negative;

--2007 Class MM-2 'AAAsf'; Outlook Negative;

--2007 Class MM-3 'AAAsf'; Outlook Negative;

--2007 Class MM-4 'AAAsf'; Outlook Negative;

--2007 Class MM-5 'AAAsf'; Outlook Negative;

--2007 Class MM-6 'AAAsf'; Outlook Negative.

Pennsylvania Higher Education Assistance Agency 1997 Trust Indenture Subordinate Class Notes

--2000-1 Class G 'BBB-sf'; Outlook Stable;

--2000-3 Class K 'BBB-sf''; Outlook Stable;

--2001 Class M 'BBB-sf'; Outlook Stable;

--2002-1 Class O 'BBB-sf'; Outlook Stable;

--2002-4 Class U 'BBB-sf'; Outlook Stable;

--2003-1 Class X 'BBB-sf'; Outlook Stable;

--2005-3 Class FF 'BBB-sf'; Outlook Stable;

--2006-1 Class II 'BBB-sf'; Outlook Stable;

--2006-2 Class KK 'BBB-sf'; Outlook Stable;

--2007 Class NN 'BBB-sf'; Outlook Stable.

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

Applicable Criteria and Related Research:

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated Apr. 3, 2012;

--'Global Structured Finance Rating Criteria', dated Jun. 6, 2012;

--'Fitch Clarifies Policy for Structured Finance Rating Confirmations', dated Jan. 13, 2009;

--'Fitch Clarifies Policy on Student Loan ABS Confirmation Requests', dated May 8, 2009.

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
Kinga Gorniak, +1-212-908-0792
Associate Director
Fitch Ratings, Inc.
One States Street Plaza, New York, NY 10004
or
Committee Chairperson
Steven Stubbs, +1-212-908-0676
Senior Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Kinga Gorniak, +1-212-908-0792
Associate Director
Fitch Ratings, Inc.
One States Street Plaza, New York, NY 10004
or
Committee Chairperson
Steven Stubbs, +1-212-908-0676
Senior Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com