Fitch Affirms Educational Funding of the South, Inc. 2011-1 Trust

NEW YORK--()--Fitch Ratings affirms the senior notes at 'AAAsf' and the subordinate notes at 'AA+sf' issued by Educational Funding of the South, Inc. 2011-1. The Rating Outlook remains Stable for all notes.

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 currently rates the U.S. 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of December 2014 collection period, reported senior and total parity is at 116.91% and 107.62%, respectively. Additionally, the trust is in turbo and no cash can be released until all the notes have been paid in full. Furthermore, Fitch's ratings only address timely interest payment for class A notes and class B notes up to interest cap on each distribution date. The ratings do not address the ultimate payment of class B carryover amount.

Adequate Liquidity Support: Liquidity support is provided by a debt service reserve fund currently sized at $2,519,516 (0.50 basis points [bps] of outstanding bond balance, with a floor of 0.15bps).

Acceptable Servicing Capabilities: Day-to-day servicing is provided by PHEAA, which Fitch deems to be an acceptable FFELP student loan servicer.

RATING SENSITIVITIES

Since the FFELP student loan ABS relies 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:

Educational Funding of the South, Inc. Series 2011-1:

-- Class A-1 PIF;

-- Class A-2 affirmed at 'AAAsf'; Outlook Stable;

-- Class B affirmed at 'AA+sf'; Outlook Stable.

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

Applicable Criteria and Related Research:

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

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

Additional Disclosure

Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978742

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Contacts

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

Contacts

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