Fitch Affirms Various Navient 2005 Student Loan Trusts

NEW YORK--()--Fitch Ratings has affirmed the senior notes issued by SLM Student Loan Trust 2005-6, SLM Student Loan Trust 2005-7, and SLM Student Loan Trust 2005-8 at 'AAAsf' and has affirmed the subordinate notes issued by these trusts at 'Asf'. The Rating Outlook remains Stable on all notes.

A full list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

High Collateral Quality: The trusts' collateral are comprised 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. Fitch currently rates the U.S. sovereign at 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement (CE): CE is provided by excess spread and for the class A notes, subordination of the class B notes. As of March 2016, Fitch calculated total and senior parity ratios (which include the reserve fund) are 100.12% and 105.16% (4.91% CE) for SLM 2005-6; 100.40% and 106.15% (5.79% CE) for SLM 2005-7; 100.30% and 105.84% (5.51% CE) for SLM 2005-8. Cash will continue to be released from SLM 2005-6 as long as the current $1.7 million of OC is maintained. The SLM 2005-7 and SLM 2005-8 are likewise releasing cash, with target parity ratios of 100% (excluding the reserve, as pool factors are below 40%).

Adequate Liquidity Support: Liquidity support is provided by reserve accounts sized at their floors of $4,950,100, $2,280,587, and $3,780,805 for the SLM 2005-6, SLM 2005-7, and SLM 2005-8 trusts, respectively.

Acceptable Servicing Capabilities: Day to day servicing is provided by Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.), In Fitch's opinion, Navient is an acceptable servicer of FFELP student loans.

In December 2015, Fitch released an exposure draft that delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014. Fitch has reviewed transactions under both the existing and proposed criteria.

On June 9, 2016, Fitch published a press release titled 'Fitch Finalizing Changes to FFELP Student Loan ABS Criteria' that details likely changes to the final criteria report, which it expects to publish in less than 60 days.

CRITERIA VARIATIONS

In certain LIBOR-down interest rate stress scenarios the basis spread may be compressed, as Fitch would apply a floor to one-month LIBOR at a negative rate level in accordance with Fitch's 'Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds' (May 2016). Since the updated interest rate stresses are not addressed yet in existing FFELP criteria, this represents a criteria variation. Use of the criteria variation did not have a measurable impact upon the ratings assigned.

Under the 'Counterparty Criteria for Structured Finance and Covered Bonds', dated May 14, 2014, Fitch looks to its own ratings in analyzing counterparty risk and assessing a counterparty's creditworthiness. The definition of permitted investments for this deal allows for the possibility of using investments not rated by Fitch, which represents a criteria variation. Since the only available funds to invest in are those held in the Collection Account, and the funds can only be invested for a short duration of three months given the payment frequency of the notes, Fitch doesn't believe such variation has a measurable impact upon the ratings assigned.

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 buildup 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.

Fitch has affirmed the following ratings:

SLM Student Loan Trust 2005-6:

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

--Class A-5B notes at 'AAAsf'; Outlook Stable;

--Class A-6 notes at 'AAAsf'; Outlook Stable;

--Class A-7 notes at 'AAAsf'; Outlook Stable;

--Class B notes at 'Asf'; Outlook Stable.

SLM Student Loan Trust 2005-7:

--Class A-3 notes at 'AAAsf'; Outlook Stable;

--Class A-4 notes at 'AAAsf'; Outlook Stable;

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

--Class B notes at 'Asf'; Outlook Stable.

SLM Student Loan Trust 2005-8:

--Class A-3 notes at 'AAAsf'; Outlook Stable;

--Class A-4 notes at 'AAAsf'; Outlook Stable;

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

--Class B notes at 'Asf'; Outlook Stable.

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

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 17 May 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=879815

Criteria for Servicing Continuity Risk in Structured Finance (pub. 17 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875586

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=1006018

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1006018

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Eric Orenstein
Analyst
+1-646-582-4816
Fitch Ratings, Inc.
33 Whitehall St.
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

Contacts

Fitch Ratings
Primary Analyst
Eric Orenstein
Analyst
+1-646-582-4816
Fitch Ratings, Inc.
33 Whitehall St.
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