Fitch Affirms EdLinc 2012-1 Senior Notes; Upgrades Sub Notes

NEW YORK--()--Fitch Ratings affirms the senior student loan asset-backed notes issued by the EdLinc Student Loan Funding Trust 2012-1 (EdLinc 2012-1) Class A notes at 'AAAsf'. In addition, Fitch upgrades the EdLinc 2012-1 subordinate class B notes to 'AAsf' from 'Asf'. The Outlook for the senior class A notes and subordinate class B notes remains Stable. The upgrade of the subordinate notes is driven by improved parity and its ability to sustain higher rating stresses.

KEY RATING DRIVERS

Adequate Collateral Quality: The collateral consists of 100% of 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.

Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. The senior parity ratio is currently 117.75% and the total parity is 107.12% as of June 30, 2014, including the Reserve Account. The trust is in turbo, and no cash is being released from the trust; therefore, parity will continue to increase. The senior and subordinate notes pass Fitch's cash flows for their respective ratings.

Adequate Liquidity Support: Liquidity support is provided by reserve account which is equal to the greater of 0.25% of the outstanding notes, and $500,000.

Satisfactory Servicing Capabilities: Xerox Education Services, Inc. (XEROX-ES), formerly ACS Education Services, Inc., services 92.46% of the EdLinc 2012-1 portfolio and Great Lakes Education Loan Services, Inc. (GLELSI) services the remaining 7.54%. Fitch has reviewed the servicing operations of the servicers and believes them 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:

EdLinc Student Loan Funding Trust 2012-1, Student Loan Asset-Backed Notes:

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

--Subordinate Class B upgraded to 'AAsf' from 'Asf'; Outlook Stable.

A comparison of the transaction's Representations, Warranties, and Enforcement Mechanisms (RW&Es) to those of typical RW&Es for student loans is available by accessing the reports and links below:

--'Edlinc Student Loan Funding Trust 2012-1 -Appendix'(Oct. 1, 2012);

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

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 23, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530

EdLinc Student Loan Funding Trust 2012-1 -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749950

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=903594

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 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.

Contacts

Fitch Ratings
Primary Analyst
Jeffrey Prackup
Director
+1 212-908-0839
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Harry Kohl
Associate Director
+1 212-908-0837
or
Committee Chairperson
Tracy Wan
Senior Director
+1 212-908-9171
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Jeffrey Prackup
Director
+1 212-908-0839
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Harry Kohl
Associate Director
+1 212-908-0837
or
Committee Chairperson
Tracy Wan
Senior Director
+1 212-908-9171
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com