Fitch Maintains 3 SLC Student Loan Trusts Sr Bonds on Rating Watch; Upgrades Sub Bonds

Fitch Ratings maintains the senior bonds currently rated 'AAAsf' issued by SLC Student Loan Trust 2005-2 (SLC 2005-2); SLC Student Loan Trust 2005-3(SLC 2005-3) and SLC Student Loan Trust 2006-1 (SLC 2006-1) on Rating Watch Negative. In addition, Fitch upgrades the subordinate bonds issued from SLC 2005-2 to 'Asf' from 'BBB-sf', and upgrades the subordinate bonds issued from SLC 2005-3 and SLC 2006-1 to 'Asf' from 'BBBsf'; each trust has a Stable Outlook. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS:

High Collateral Quality: The SLC 2005-2, SLC 2005-3 and SLC 2006-1 trust collateral consists of 100% FFELP 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.

Rating Watch Maintained: All existing and new issuances of 'AAA' rated tranches of FFELP securitizations are on Rating Watch Negative following the revision of the long-term foreign and local currency Issuer Default Ratings (IDRs) of the U.S.

Sufficient Credit Enhancement (CE): The upgrade of the subordinate notes is based on the sufficient level of CE to cover applicable risk factor stresses. The senior notes will benefit from the CE provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. The senior notes also benefit from the subordination of the class B notes. The senior parity ratios for the SLC 2005-2, SLC 2005-3 and SLC 2006-1 trusts (total assets to senior liabilities) are currently 104.49%, 104.57%, and 104.95% respectively, each including their reserve accounts. The trusts have met their cash release levels of 100% total parity and are currently releasing cash from their trusts. In Fitch's analysis, the bonds passed the cash flows corresponding to their rating stresses.

Adequate Liquidity Support: Liquidity support is provided by the reserve account for each trust, which is equal to the greater of 0.25% of the respective outstanding bonds, and $1,515,458 for SLC 2005-2; $1,828,029 for SLC 2005-3; and $3,312,780 for SLC 2006-1.

Satisfactory Servicing Capabilities: For each trust, day-to-day servicing is provided by SLM Servicing, Inc., a subsidiary of SLC Corporation, which is rated 'BB+/B', Rating Watch Negative by Fitch. Fitch believes the servicing operations are acceptable at this time.

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:

SLC Student Loan Trust 2005-2:

--Class A-2; Rating Watch Negative maintained;

--Class A-3; Rating Watch Negative maintained;

--Class A-4; Rating Watch Negative maintained;

--Class B; Upgraded to 'Asf' from 'BBB-sf', Outlook Stable.

SLC Student Loan Trust 2005-3:

--Class A-2; Rating Watch Negative maintained;

--Class A-3; Rating Watch Negative maintained;

--Class A-4; Rating Watch Negative maintained;

--Class B; Upgraded to 'Asf' from 'BBBsf', Outlook Stable.

SLC Student Loan Trust 2006-1:

--Class A-4; Rating Watch Negative maintained;

--Class A-5; Rating Watch Negative maintained;

--Class A-6; Rating Watch Negative maintained;

--Class B; Upgraded to 'Asf' from 'BBBsf', Outlook Stable.

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=708661

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

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=815411

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Fitch Ratings, Inc.
Primary Analyst
Jeffrey Prackup, [phone]
Director
One State Street Plaza
New York, NY 10004
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Secondary Analyst
Jared Smith, [phone]
Analyst
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Committee Chairperson
Tracy Wan, [phone]
Senior Director
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Media Relations
Sandro Scenga, [phone]
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