Fitch Affirms Nelnet 2005-1 Notes

NEW YORK--()--Fitch Ratings affirms the senior notes at 'AAAsf' and affirms the subordinate note at 'Asf' issued by Nelnet Student Loan Trust Series 2005-1. The Stable Outlook is maintained on the senior notes and the Rating Outlook is revised to Stable from Positive on the subordinate note.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% (99.71% Non-Rehab; 0.29% Rehab) 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. 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: Credit Enhancement is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. In addition, the senior notes also benefit from subordination provided by the class B note. Fitch gives credit to the reserve fund, which is excluded from the reported parity calculation once the pool factor is below 40%. The current pool factor is at 37.88%. After factoring in the reserve account, Fitch's calculated total parity is 100.69% (0.69% CE) and Fitch's calculated senior parity is 107.06% (6.59% CE). The trust is currently releasing cash as long as the $ 3.27 million OC is maintained.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of the pool balance, and $ 1,869,282.

Acceptable Servicing Capabilities: National Education Loan Network is the master servicer. Nelnet Inc., ACS Education Services, Inc., and Great Lakes Educational Loan Services, Inc. are subservicers. Fitch believes the above mentioned entities 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:

Nelnet Student Loan Trust Series 2005-1:

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

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

--Class B at 'Asf'; Outlook to Stable from Positive.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (May 17, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

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

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=835018

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Contacts

Fitch Ratings, Inc.
Primary Analyst
Paul Jiang, +1-212-908-9120
Analyst
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings, Inc.
Primary Analyst
Paul Jiang, +1-212-908-9120
Analyst
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com