Fitch Publishes Exposure Draft for Rating U.S. FFELP ABS

Fitch Ratings has published an exposure draft with respect to its criteria for rating U.S. Federal Family Education Loan Program (FFELP) ABS. Fitch invites feedback on the proposals during the consultation period that will end on 30 May 2014. The agency will continue to apply its current criteria until the finalization of the revised criteria which Fitch expects to publish in June 2014 following the review of comments received during the consultation period.

The main proposals upon which feedback is sought are:

--Appropriation of Standard Default Rate Assumptions

The exposure draft discloses the standard default rate assumptions Fitch's uses in the cash flow modeling when issuer specific data is not available. These assumptions are based on 22 years of industry FFELP loan performance. Recent performance data indicates higher defaults for certain loan and school types and as such Fitch proposes to increase its default assumptions for these variables to reflect the performance data.

--Longer Default Timing For Consolidation Loans:

Similar to defaults, Fitch's uses industry performance data to derive default timing curves when issuer specific data is unavailable. Recent data indicates that the default timing of consolidation loans are evenly distributed over a longer period of time of at least eight years than Fitch's initial assumptions of five years. Fitch proposes extending its curve to reflect performance data.

Ratings Impact

Fitch expects minimal to no impact on existing ratings from the changes proposed above given multiple compression and other quantitative factors considered in its analysis.

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 Exposure Draft' (April 8, 2014).

Applicable Criteria and Related Research: Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria Exposure Draft

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=741218

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria - Effective Apr. 7, 2011 to Apr. 3, 2012

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=616766

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