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Fitch Rates Vermont Student Assistance Corporation Senior Series 2014A

NEW YORK--(BUSINESS WIRE)--Fitch Ratings rates Vermont Student Assistance Corporation (VSAC), education loan revenue bonds senior series 2014A (tax-exempt fixed rate bonds) as follows:

--$29,920,000 classes A-2019 to A-2033 senior series 2014A bonds 'Asf'; Outlook Stable.

KEY RATING DRIVERS

Adequate Collateral Quality: The trust will be collateralized by approximately $30.0 million of new fixed rate private student loans to be originated from deal closing through June 15, 2015, in addition to the existing $5.2 million private student loans previously originated by VSAC. The loans will be originated according to the underwriting criteria for the VSAC Fixed-Rate Private Loan.

Sufficient Credit Enhancement (CE): Transaction cash flows were satisfactory under all stressed scenarios at Fitch's 'A' rating category. CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. The parity ratio (total assets to total liabilities) is expected to be 129.14% at closing, and is expected to build up to 130.5% before any cash can be release to the issuer. Liquidity support will be provided by a capitalized interest fund of $2.8 million and a debt service reserve fund of $598,400.

Satisfactory Servicing Capabilities: Day-to-day servicing will be provided by VSAC, which has been servicing its own private loans since 1994. Fitch believes the servicing operations are acceptable at this time.

RATING SENSITIVITY

As Fitch's base case default proxy is derived primarily from historical collateral performance, actual performance may differ from the expected performance, resulting in higher loss levels than the base case. This will result in a decline in CE and remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

Fitch evaluated the sensitivity of the ratings assigned to VSAC 2014A to increased defaults, reduced recoveries and excess spread over the life of the transaction. Fitch's analysis found that the transaction displays some sensitivity to the above factors, showing a potential downgrade to BBB and CCC.

For further discussion of our sensitivity analysis, please see the related presale report 'Vermont Student Assistance Corporation, Senior Series 2014A', dated May 21, 2014, available on www.fitchratings.com.

Fitch Assigns the following ratings:

Vermont Student Assistance Corporation 2014A Indenture:

A-2019 'Asf'; Outlook Stable;

A-2020 'Asf'; Outlook Stable;

A-2021 'Asf'; Outlook Stable;

A-2022 'Asf'; Outlook Stable;

A-2023 'Asf'; Outlook Stable;

A-2024 'Asf'; Outlook Stable;

A-2025 'Asf'; Outlook Stable;

A-2026 'Asf'; Outlook Stable;

A-2027 'Asf'; Outlook Stable;

A-2028 'Asf'; Outlook Stable;

A-2029 'Asf'; Outlook Stable;

A-2030 'Asf'; Outlook Stable;

A-2031 'Asf'; Outlook Stable;

A-2032 'Asf'; Outlook Stable;

A-2033 'Asf'; Outlook Stable.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'U.S. Private Student Loan ABS Criteria' (Jan. 29, 2014);

--'Vermont Student Assistance Corporation, Senior Series 2014A' (May 21, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

U.S. Private Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730956

Vermont Student Assistance Corporation, Senior Series 2014A (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748854

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=838754

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Contacts

Fitch Ratings
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Jeffrey Prackup
Director
+1-212-908-0839
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Charlene Davis
Director
+1-212-908-0213
or
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Tracy Wan
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