Fitch Affirms Iowa Student Loan Liquidity Corporation Series 2011A&B Notes; Outlook Stable

Fitch Ratings has affirmed the ratings on the Iowa Student Loan Liquidity Corporation's student loan revenue bonds, senior series 2011A notes (ISLLC 2011A) and senior series 2011B notes (ISLLC 2011B). The Rating Outlook remains Stable. A detailed list of rating actions follows at the end of this press release.

Fitch's Global Structured Finance Rating Criteria and Private Student Loan Asset-Backed Securities (ABS) Criteria were used to review the transaction.

KEY RATING DRIVERS

Adequate Collateral Quality:

The ISLLC 2011A and ISLLC 2011B bonds are secured by existing private student loans. In addition, the ISLLC 2011A trust purchased new private student loans during the recycling period which ended in June 2013. All loans have been credit tested and are originated under ISLLC's private loan programs. Based on the trusts' performance, Fitch estimates remaining defaults to range between 14% and 17% for ISLLC 2011A and between 8% and 12% for ISLLC 2011B as a percentage of the current principal balance. Recovery is assumed to be 10% in our analysis.

Sufficient Credit Enhancement:

Transaction credit enhancement is sufficient to provide loss coverage multiples corresponding to Fitch's 'A' rating category. CE is provided by OC (the excess of the trust's asset balance over the bond balance) and excess spread. The parity ratio (total assets to total liabilities) for ISLLC 2011A's is 180.52% as of June 30, 2014 and for ISLLC 2011B 172.26% as of Aug. 31, 2014. For the ISLLC 2011A transaction, Iowa Student Loan (ISLLC) entered into an interest rate swap agreement to mitigate interest rate risk.

Adequate Liquidity Support:

ISLLC 2011A's liquidity support is provided by a reserve account sized at the greater of 2% of ISLLC 2011A's bond balance and $4,322,000. ISLLC 2011B's liquidity support is provided by a reserve account sized at the greater of 0.50% of the current pool balance and 0.15% of the initial pool balance.

Satisfactory Servicing Capabilities:

Aspire Resources, a subsidiary of ISLLC, services the portfolio of loans, and Pennsylvania Higher Education Assistance Agency acts as the back-up servicer. Fitch has reviewed the servicing operations of Aspire Resources and views it to be an acceptable servicer.

Loss coverage multiples were determined by comparing the projected net loss amounts to available credit enhancement. Fitch used historical vintage loss data provided by ISLLC to form a loss timing curve representative of the collateral pools. After giving credit for seasoning of loans in repayment, Fitch applied the trust's current cumulative gross loss level to this loss timing curve to derive the expected gross losses over the projected remaining life. A recovery rate was applied, which was determined to be appropriate based on the latest data provided by the issuer.

In addition, the ISLLC 2011A transaction is structured with a fixed- to 3MLIBOR floating- interest rate swap since the bonds are fixed rate and the loans are indexed to 3MLIBOR. Morgan Stanley Capital Services LLC (MSCS) is the swap counterparty, and the swap includes a Bermudan option that gives the issuer the right, but not the obligation, to reduce the swap notional amount down to an amount not less than the pre-determined minimum notional amounts on the distribution dates.

RATING SENSITIVITIES

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 will continue to monitor the performance of the trust.

Fitch affirms the following ratings:

Iowa Student Loan Liquidity Corporation 2011A:

--Senior class A-1 (2014-2023) at 'Asf'; Outlook Stable;

--Senior class A-2 (2023-2030) at 'Asf'; Outlook Stable.

Iowa Student Loan Liquidity Corporation 2011B:

--Class 2011B at 'Asf'; Outlook Stable.

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

Applicable Criteria and Related Research:

--'U.S. Private Student Loan ABS Criteria' (January 2014);

--'Global Structured Finance Rating Criteria' (August 2014).

Applicable Criteria and Related Research:

U.S. Private Student Loan ABS Criteria

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

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=902094

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