Fitch Takes Various Actions on SLM Student Loan Trust 2003-2

NEW YORK--()--Fitch Ratings has taken the following rating actions on SLM Student Loan Trust 2003-2 (SLM 2003-2):

--Class A-5 affirmed at 'AAAsf'; Outlook Stable;

--Class A-6 at 'AAAsf'; Rating Watch Negative maintained;

--Class A-7 at 'AAAsf'; Rating Watch Negative maintained;

--Class A-8 at 'AAAsf'; Rating Watch Negative maintained;

--Class A-9 at 'AAAsf'; Rating Watch Negative maintained;

--Class B at 'BBBsf'; Rating Watch Negative maintained.

KEY RATING DRIVERS

Maturity Risk: The Rating Watch Negative action is based on the heightened risk of the SLM 2003-2 senior classes A-6 through A-9 missing their legal final maturity dates of Sept. 15, 2028 and the class B note missing its legal final maturity date of June 15, 2039, which would result in an event of default. In an event of such technical default, Fitch would expect ultimate repayment of full principal and interest after the legal final. Fitch expects to resolve the Rating Watch Negative status once its revised FFELP criteria report is published. The magnitude of any potential rating action could vary depending on remaining time to maturity, recent payment trends, issuer actions such as loan purchases, or other external factors.

Collateral Quality: The trust's collateral consists of 100% Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust 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. The Stable Outlook on the notes is consistent with Fitch's affirmation of the U.S. sovereign rating at 'AAA', Outlook Stable.

Credit Enhancement (CE): CE is provided by overcollateralization and excess spread. In addition, the class A notes benefit from subordination from the class B notes. As of the March 2016 distribution period, senior and total parity are at 110% and 100%, respectively. Cash is being released, as the trust has maintained the cash release level of 100% total parity.

Liquidity Support: Liquidity support is provided by a Reserve Fund currently sized at the greater of 0.25% of the pool balance and $2,005,060.

Servicing Capabilities: Navient Solutions, Inc. is responsible for day-to-day servicing of the trust. Fitch believes Navient Solutions, Inc. to be an acceptable servicer of FFELP student loans.

On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014.

Under certain stress scenarios detailed in Fitch's existing FFELP rating criteria, the class A-5 notes miss their legal final maturity of Dec. 15, 2023. Under stress scenarios detailed in Fitch's proposed FFELP rating criteria, the class A-5 notes pass all cash flow stresses for their respective rating levels.

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, basis risk, and loan extension risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults, basis shock beyond Fitch's published stresses, lower than expected payment speed, and other factors could result in future downgrades. Likewise, a build-up of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744175

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Exposure Draft: Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 04 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874971

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 23 Jun 2014)

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

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1002206

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1002206

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings, Inc.
Primary Analyst
Charlene M. Davis
Director
+1-212-908-0213
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Michael Dean
Managing Director
+1-212-908-0556
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings, Inc.
Primary Analyst
Charlene M. Davis
Director
+1-212-908-0213
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Michael Dean
Managing Director
+1-212-908-0556
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com