Fitch Affirms Academic Loan Funding Trust 2012-1 Senior Notes at 'AAAsf'; Outlook Stable

NEW YORK--()--Fitch Ratings affirms Academic Loan Funding Trust 2012-1 senior notes at 'AAAsf'. The Rating Outlook remains Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral comprises 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. Fitch affirmed the U.S. sovereign rating at 'AAA' and assigned a Stable Outlook on March 24, 2014.

Sufficient Credit Enhancement: Credit enhancement (CE) is provided by overcollateralization (OC), and the excess spread. As of February 2014, total parity is 103.93% (3.32% CE). A target total parity of 104% must be met before excess cash can be released from the trust.

Adequate Liquidity Support: Liquidity support is provided by Debt Service Reserve Fund sized at a greater of 0.10% of the pool balance and $1,250,000.

Acceptable Servicing Capabilities: Day to day servicing is provided by ACS Education Services, Inc. (ACS), American Education Services (AES) and Great Lakes Higher Education Corp, all acceptable servicers of FFELP.

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:

Academic Loan Funding Trust Series 2012-1:

--Class A-1 note at AAAsf; Outlook remains Stable;

--Class A-2 note at AAAsf; Outlook remains 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.

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:

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

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

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

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

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=830538

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Contacts

Fitch Ratings
Primary Analyst
Lisette Figueroa
Analyst
+1-212-908-0836
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Lisette Figueroa
Analyst
+1-212-908-0836
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com