Fitch Rates Navient Student Loan Trust 2015-3

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns ratings to Navient Student Loan Trust 2015-3 as follows:

--$252,200,000 class A-1 notes at 'AAAsf; Outlook Stable;

--$486,000,000 class A-2 notes at 'AAAsf; Outlook Stable;

--S20, 000,000 class B notes at 'A+sf; Outlook Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of Federal Family Education Loan Program (FFELP) loans, including approximately 20% of rehab 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. at 'AAA'/Stable Outlook.

Sufficient Credit Enhancement (CE): Cash flow scenarios for the class A and B notes were satisfactory under Fitch's 'AAAsf' and 'A+sf' stresses, respectively. CE is provided by overcollateralization (OC), excess spread and, for the class A notes, approximately 2.64% of subordination provided by the class B notes. A target OC amount equal to the greater of 1.5% of the adjusted pool balance and $3 million must be met before excess cash can be released.

Adequate Liquidity Support: Liquidity support is provided by a reserve account sized at 1.65% of the initial student loan balance which is funded at closing. The required reserve account balance for any distribution dates prior to June 25, 2016 (the step-down date) is 1.65% of the current student loan balance. Thereafter, the requirement will be the greater of 0.25% of the current student loan balance and 0.10% of the initial student loan balance.

Acceptable Servicing Capabilities: Navient Solutions, Inc. will service 100% of the trust's student loan pool. In Fitch's opinion, Navient Solutions, Inc. is an acceptable servicer 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 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

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

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=986667

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=986667

Endorsement Policy

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

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View source version on businesswire.com: http://www.businesswire.com/news/home/20150618006441/en/

Fitch Ratings
Primary Analyst
Charlene M. Davis
Director
+1-202-908-0213
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Paul Jiang
Associate Director
+1-202-908-9120
or
Committee Chairperson
Tracy Wan
Senior Director
+1-202-908-9171
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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