Fitch Affirms Scholar Funding Trust 2012-A Senior Notes

NEW YORK--()--Fitch Ratings affirms the senior student loan notes at 'AAAsf' issued by Scholar Funding Trust 2012-A. The Rating Outlook on the senior notes, which is tied to the sovereign rating of the U.S. government, is Stable.

KEY RATING DRIVERS

High Collateral Quality: The collateral consists of 100% rehab 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 reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch affirmed at 'AAA' and assigned a Stable Outlook to the U.S. sovereign rating on March 24, 2014.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of the April 2014 servicer report, total parity remained steady at 105.99%, which is the release level.

Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Fund currently sized at $399,461 (0.25% of the bond balance, with a floor of 0.15%). Additionally, there is a capitalized interest account currently sized at $1.3 million, scheduled to release on July 28th, 2017.

Acceptable Servicing Capabilities: JP Morgan Chase Bank N.A. is the master servicer and Xerox-ES and Tru Student, Inc. are the sub-servicer of this trust. Fitch believes all servicers to be 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 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 upgrades.

Fitch has taken the following rating actions:

Scholar Funding Trust 2012-A:

--Class A affirmed at 'AAAsf'; Outlook Stable.

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);

--'Scholar Funding Trust 2012-A, Class A Student Loan Asset-Backed Notes (US ABS)' (June 12, 2012).

A comparison of the transaction's RW&Es to those of typical RW&Es for student loans is available by accessing the reports and links below:

--'Scholar Funding Trust 2012-A, Class A Student Loan Asset-Backed Notes -- Appendix' (June 12, 2012).

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended' (April 17, 2012).

Applicable Criteria and Related Research:

Scholar Funding Trust 2012-A, Class A Student Loan Asset-Backed Notes -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681638

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

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

Global Structured Finance Rating Criteria

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

Scholar Funding Trust 2012-A, Class A Student Loan Asset-Backed Notes (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681409

Additional Disclosure

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Contacts

Fitch Ratings
Primary Analyst
Victoria Ohorodnyk
Associate Director
+1 212-908-0866
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1 212-908-9171
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Victoria Ohorodnyk
Associate Director
+1 212-908-0866
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1 212-908-9171
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com