Fitch Gives 12 National Collegiate Student Loan Trust Transactions ‘Outlook Negative’ Ratings!

As you may or may not know National Collegiate Student Loans is American Education Services which is of course the Pennsylvania Higher Education Assistance Agency (PHEAA). All of the National Collegiate Trusts listed below can be found HERE PHEAA’s website and HERE the Irish Stock Exchange.

P.S. Despite Fitch and ‘National Collegiate’s’ assertion that the Loans held or rather owned by the National Collegiate Student Loan Trusts are Private Student Loans…they are NOT! The National Collegiate loans are FEDERAL FFELP LOANS that were FRAUDULENTLY CONSOLIDATED WITHOUT THE BORROWERS KNOWLEDGE OR CONSENT!

If you received federal student loans in 2003, 2004, 2005, 2006, or 2007 that were or are serviced by American Education Services (AES) then it may be worth your while to look into this!

NEW YORK–(BUSINESS WIRE)–Fitch Ratings has affirmed all ratings across 12 National Collegiate Student Loan Trust (NCSLT) transactions.

The affirmations reflect the stable loss coverage multiples of the trusts since Fitch’s last review on Jan. 29, 2010, which continue to reflect high default levels in excess of Fitch’s initial expectations.

In addition, Fitch removes from Rating Watch Negative and subsequently assigns Negative Rating Outlooks to NCSLT 2006-3 through 2007-2 to reflect Fitch’s overall view of the private student loan sector. The Outlook remains Negative on non-distressed ratings in NCSLT 2003-1 through 2006-2. These actions are based upon Fitch’s Global Structured Finance Criteria and U.S. Private Student Loan ABS Criteria.

For each trust, Fitch conducted a review of the collateral performance that involved the calculation of loss coverage multiples based on the most recent variables. A projected net loss amount was compared to available credit enhancement to determine the loss multiples. Fitch used historical vintage loss data provided by the issuer to form a loss timing curve representative of the private student loan collateral pools of each trust. After giving credit for seasoning of loans in repayment, Fitch applied the current cumulative gross loss level to this loss timing curve to derive the expected gross losses over the remaining life for each trust. A recovery rate of 25% was applied, which assumes no further payments from TERI other than the funded pledge accounts.

The available credit enhancement for the trusts consists of excess spread, overcollateralization (if any), and subordination where applicable. Fitch assumed excess spread to be the lesser of the historical average excess spread (earning on the assets minus interest payments to bondholders and fees) and the most recent 12-month average excess spread, and applied that same rate over the remaining life. Given the high default forecasts relative to the remaining pool balance, the multiples were compressed to achieve through-the-cycle rating stability.

Fitch has affirmed the following classes:

National Collegiate Student Loan Trust 2003-1:
–Class A-6 at ‘BBBsf’; Outlook Negative;
–Class A-7 at ‘BBBsf’; Outlook Negative;
–Class A-IO at ‘BBBsf’; Outlook Negative;
–Class B-1 at ‘Csf’;
–Class B-2 at ‘Csf’.

National Collegiate Student Loan Trust 2004-1:
–Class A-2 at ‘BB+sf’; Outlook Negative;
–Class A-3 at ‘BB+sf’; Outlook Negative;
–Class A-4 at ‘BB+sf’; Outlook Negative;
–Class A-IO-2 at ‘BB+sf’; Outlook Negative;
–Class B-1 at ‘Csf’;
–Class B-2 at ‘Csf’.

National Collegiate Student Loan Trust 2004-2/NCF Grantor Trust 2004-2:
–Class A-3 at ‘BBB+sf’; Outlook Negative;
–Class A-4 at ‘BBB+sf’; Outlook Negative;
–Class A-5 1 at ‘BBB+sf’; Outlook Negative;
–Class A-5 2 at ‘BBB+sf; Outlook Negative;
–Class A-IO at ‘BBB+sf’; Outlook Negative;
–Class B at ‘BB+sf’; Outlook Negative;
—Class C at ‘CCCsf’.

National Collegiate Student Loan Trust 2005-1/NCF Grantor Trust 2005-1:
–Class A-2 at ‘BBBsf’; Outlook Negative;
–Class A-3 at ‘BBBsf’; Outlook Negative;
–Class A-4 at ‘BBBsf’; Outlook Negative;
–Class A-5 1 at ‘BBBsf’; Outlook Negative;
–Class A-5 2 at ‘BBBsf’; Outlook Negative;
–Class B at ‘BB-sf’; Outlook Negative’;
–Class C at ‘CCsf‘.

National Collegiate Student Loan Trust 2005-2/NCF Grantor Trust 2005-2:
–Class A-2 at ‘BBB-sf’; Outlook Negative;
–Class A-3 at ‘BBB-sf’; Outlook Negative;
–Class A-4 at ‘BBB-‘sf; Outlook Negative;
–Class A-5-1 at ‘BBB-sf’; Outlook Negative;
–Class A-5-2 at ‘BBB-sf’; Outlook Negative;
–Class A-IO at ‘BBB-sf’; Outlook Negative;
–Class B at ‘B+sf’; Outlook Negative;
–Class C at ‘CCsf’.

National Collegiate Student Loan Trust 2005-3/NCF Grantor Trust 2005-3:
–Class A-2 at ‘BBB-sf’; Outlook Negative;
–Class A-3 at ‘BBB-sf’; Outlook Negative;
–Class A-4 at ‘BBB-sf’; Outlook Negative;
–Class A-5-1 at ‘BBB-sf’; Outlook Negative;
–Class A-5-2 at ‘BBB-sf’; Outlook Negative;
–Class A-IO-1 at ‘BBB-sf’; Outlook Negative;
–Class A-IO-2 at ‘BBB-sf’; Outlook Negative;
–Class B at ‘BB-sf’; Outlook Negative;
–Class C at to ‘CCsf’.

National Collegiate Student Loan Trust 2006-1:
–Class A-2 at ‘BB+sf’; Outlook Negative;
–Class A-3 at ‘BB+sf’; Outlook Negative;
–Class A-4 at ‘BB+sf’; Outlook Negative;
–Class A-5 at ‘BB+sf’; Outlook Negative;
–Class A-IO at ‘BB+sf’; Outlook Negative;
–Class B at ‘B+sf’; Outlook Negative;
–Class C at ‘CCsf’.

National Collegiate Student Loan Trust 2006-2:
—Class A-1 at ‘BB-sf’; Outlook Negative;
–Class A-2 at ‘BB-sf’; Outlook Negative;
–Class A- at ‘BB-sf’; Outlook Negative;
–Class A-4 at ‘BB-sf’; Outlook Negative;
–Class A-IO at ‘BB-sf’; Outlook Negative;
–Class B at ‘CCCsf’;
–Class C at ‘CCsf’.

Fitch has removed from Rating Watch Negative, affirmed, and assigned Outlooks to the following classes as indicated:

National Collegiate Student Loan Trust 2006-3:
–Class A-2 at ‘BBB+sf’; Outlook Negative;
–Class A-3 at ‘BBB+sf’; Outlook Negative;
–Class A-4 at ‘BBB+sf’; Outlook Negative;
–Class A-5 at ‘BBB+sf’; Outlook Negative;
–Class A-IO at ‘BBB+sf’; Outlook Negative;
–Class B at ‘BB+sf’; Outlook Negative;
–Class C at ‘B+sf’; Outlook Negative;
–Class D at ‘CCCsf’.

National Collegiate Student Loan Trust 2006-4:
–Class A-1 at ‘BBBsf’; Outlook Negative;
–Class A-2 at ‘BBBsf’; Outlook Negative;
–Class A-3 at ‘BBBsf’; Outlook Negative;
–Class A-4 at ‘BBBsf’; Outlook Negative;
–Class A-IO at ‘BBBsf’; Outlook Negative;
–Class B at ‘BBsf’; Outlook Negative;
–Class C at ‘Bsf’; Outlook Negative;
–Class D at ‘CCsf’.

National Collegiate Student Loan Trust 2007-1:
–Class A-1 at ‘BBB-sf’; Outlook Negative;
–Class A-2 at ‘BBB-sf’; Outlook Negative;
–Class A-3 at ‘BBB-sf’; Outlook Negative;
–Class A-4 at ‘BBB-sf’; Outlook Negative;
–Class A-IO at ‘BBB-sf’; Outlook Negative;
–Class B at ‘BBsf’; Outlook Negative;
–Class C at ‘Bsf’; Outlook Negative;
–Class D at ‘CCsf’.

National Collegiate Student Loan Trust 2007-2:
–Class A-1 at ‘BBBsf’; Outlook Negative;
–Class A-2 at ‘BBBsf’; Outlook Negative;
–Class A-3 at ‘BBBsf’; Outlook Negative;
–Class A-4 at ‘BBBsf’; Outlook Negative;
–Class A-IO at ‘BBBsf’; Outlook Negative;
–Class B at ‘BBB-sf’; Outlook Negative;
–Class C at ‘BB-sf’; Outlook Negative;
–Class D at ‘CCCsf’.

Applicable Criteria and Related Research:

–‘Global Structured Finance Rating Criteria’, dated Aug. 13, 2010;
–‘U.S. Private Student Loan Criteria’, dated Aug. 24, 2009;
–‘Rating US Federal Family Education Loan Program Student Loan ABS’, dated April 11, 2008;
–‘Fitch to Begin Review of U.S. FFELP SLABS Applying Updated Criteria’, dated June 29, 2010;
–‘Fitch to Gauge Basis Risk in Auction-Rate U.S. FFELP SLABS Review’, dated Sept. 22, 2010.

Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=463174
Rating US Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=382306

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE.

Contacts

Fitch Ratings
Primary Analyst
Emily Lee, +1-212-908-0667
Director
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Cynthia Ullrich, +1-212-908-0609
Senior Director
or
Media Relations:
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com

A How-To Instruction Manual For the ‘Ambitious’ For-Profit College

Here is a Profile of the Sociopath  that can be found in its entirety at the link. A more in depth discussion and list of symptoms can be found at Sociopath World I highly recommend checking it out (alongside for-profit college recruiting and promotional materials).

Profile of the Sociopath

• Glibness and Superficial Charm
• Manipulative and Conning
  They never recognize the rights of others and see their self-serving behaviors as permissible. They appear to be charming, yet are covertly hostile and domineering, seeing their victim as merely an instrument to be used. They may dominate and humiliate their victims.
• Grandiose Sense of Self
  Feels entitled to certain things as “their right.”
• Pathological Lying
  Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests.
• Lack of Remorse, Shame or Guilt
  A deep seated rage, which is split off and repressed, is at their core. Does not see others around them as people, but only as targets and opportunities. Instead of friends, they have victims and accomplices who end up as victims. The end always justifies the means and they let nothing stand in their way.
• Shallow Emotions
  When they show what seems to be warmth, joy, love and compassion it is more feigned than experienced and serves an ulterior motive. Outraged by insignificant matters, yet remaining unmoved and cold by what would upset a normal person. Since they are not genuine, neither are their promises.
• Callousness/Lack of Empathy
  Unable to empathize with the pain of their victims, having only contempt for others’ feelings of distress and readily taking advantage of them.
• Poor Behavioral Controls/Impulsive Nature
  Rage and abuse, alternating with small expressions of love and approval produce an addictive cycle for abuser and abused, as well as creating hopelessness in the victim. Believe they are all-powerful, all-knowing, entitled to every wish, no sense of personal boundaries, no concern for their impact on others.
• Irresponsibility/Unreliability
  Not concerned about wrecking others’ lives and dreams. Oblivious or indifferent to the devastation they cause. Does not accept blame themselves, but blames others, even for acts they obviously committed.
• Lack of Realistic Life Plan/Parasitic Lifestyle
  Tends to move around a lot or makes all encompassing promises for the future, poor work ethic but exploits others effectively.
• Criminal or Entrepreneurial Versatility
  Changes their image as needed to avoid prosecution.

---

Other Related Qualities:

1. Contemptuous of those who seek to understand them
2. Does not perceive that anything is wrong with them
3. Authoritarian
4. Secretive
5. Paranoid
6. Only rarely in difficulty with the law, but seeks out situations where their tyrannical behavior will be tolerated, condoned, or admired
7. Conventional appearance
8. Goal of enslavement of their victim(s)
9. Exercises despotic control over every aspect of the victim’s life
10. Has an emotional need to justify their crimes and therefore needs their victim’s affirmation (respect, gratitude and love)
11. Ultimate goal is the creation of a willing victim
12. Incapable of real human attachment to another
13. Unable to feel remorse or guilt
14. Extreme narcissism and grandiose
15. May state readily that their goal is to rule the world

(The above traits are based on the psychopathy checklists of H. Cleckley and R. Hare.)

This little gem of an article is courtesy of and can be found @ ForProfitEDU. Please keep in mind the profile above as you read through the article below.

Understanding why for-profits are growing @ ForProfitEDU

All student interests and motivations are not at all the same, you need to understand their motivations to understand the market.  Lack of Remorse, Shame or Guilt: A deep seated rage, which is split off and repressed, is at their core. Does not see others around them as people, but only as targets and opportunities. Instead of friends, they have victims and accomplices who end up as victims. The end always justifies the means and they let nothing stand in their way. Shallow Emotions: When they show what seems to be warmth, joy, love and compassion it is more feigned than experienced and serves an ulterior motive. Outraged by insignificant matters, yet remaining unmoved and cold by what would upset a normal person. Since they are not genuine, neither are their promises.

You need to not think about yourself here as you are NOT the typical student growing to these schools. Grandiose Sense of Self Feels entitled to certain things as “their right.”
Hmm could this be code for ‘minority’ seeing as the argument has been that the For-Profit College regulations penalize minorities.

We are talking demographics, ethnicity’s, socioeconomic differences and growing population trends.  For many of us the decision to go to college was a big one. College is a BIG DECISION for most people, especially now that college tuition costs the same as a Bentley!  Thanks Wall Street!

We spent a lot of time and effort thinking about where to go, the advantages of each school and what would be the best opportunity for us.  We went and visited many of the schools, we looked at the academia, the campus life and the fit for us at those schools. The question was not should we go to college, but rather which college should we go to… this was a massive decision and we treated it as such. Grandiose Sense of Self: Feels entitled to certain things as “their right.”

Well, that’s not the case for the vast majority of the students who enroll in the for-profit schools. Rage and abuse, alternating with small expressions of love and approval produce an addictive cycle for abuser and abused, as well as creating hopelessness in the victim. Believe they are all-powerful, all-knowing, entitled to every wish, no sense of personal boundaries, no concern for their impact on others

They for the most part are simply viewing the decision as I need to get a degree, and I don’t have the luxury of stopping everything else in my life for 4 years in order to get it.  Thanks to you and your Wall Street cronies the majority of people, including those you reference above, no longer have that option psycho!

I need to get a degree to get a job and start my career.  I can’t make any money without a degree, so how do I get my degree.  I also want it local and flexible (or online) so my life doesn’t have to stop while I am doing it. Callousness/Lack of Empathy Unable to empathize with the pain of their victims, having only contempt for others’ feelings of distress and readily taking advantage of them. Here comes the BAIT and SWITCH that we’re all so PISSED OFF ABOUT!

They search online or maybe see a TV commercial, they call or fill out a lead form (requesting information) and then they get “the call”.  The call is when a trained admissions rep (in other industries they are called sales reps.) calls them ASAP.  The faster they get them on the phone, the better their odds of bringing in the student.  Lack of Realistic Life Plan/Parasitic Lifestyle: Tends to move around a lot or makes all encompassing promises for the future, poor work ethic but exploits others effectively. 

They establish a rapport, they build the case for why the prospective student MUST move forward to change their life for the better and they go for the enrollment.  Shallow Emotions: When they show what seems to be warmth, joy, love and compassion it is more feigned than experienced and serves an ulterior motive. Outraged by insignificant matters, yet remaining unmoved and cold by what would upset a normal person. Since they are not genuine, neither are their promises.

Most prospects don’t shop around, and once they have established a relationship with a school they move forward with that school, rarely will they return calls from the other schools they may have requested info from. Manipulative and Conning: They never recognize the rights of others and see their self-serving behaviors as permissible. They appear to be charming, yet are covertly hostile and domineering, seeing their victim as merely an instrument to be used. They may dominate and humiliate their victims. It’s called trust you Sociopath….they trust you and y0ur admissions counselors! They trust that you have their best interests in mind that you understand they want to better themselves and their lives. So what do you do? You take that trust and use it in the most SATANIC, DESPICABLE AND DASTARDLY MANNER FOR YOUR OWN PERSONAL MONETARY GAIN

They rarely step back and say…okay I need to stop here for a moment and look at what else is out there. Irresponsibility/Unreliability: Not concerned about wrecking others’ lives and dreams. Oblivious or indifferent to the devastation they cause. Does not accept blame themselves, but blames others, even for acts they obviously committed.

They instead plow ahead and move through the process including financial aid and ultimately start school.  It’s a means to an end decision, and often a degree is a degree is a degree type of thinking.  Therefore, as the population continues to shift to an increasing percentage of the population of the non-traditional means to an ends thinking student from the traditional college selection is a huge decision for me student for-profits will continue to grow. Their models are aggressive, fine tuned marketing & enrolment machines, yet they provide the solution to what a growing population is looking for. Pathological Lying: Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests.Criminal or Entrepreneurial Versatility: Changes their image as needed to avoid prosecution.  

A college degree and/ or career training in an environment filled with like minded students whose goal is to get a degree as soon as they can so they can join the workforce.  Callousness/Lack of Empathy: Unable to empathize with the pain of their victims, having only contempt for others’ feelings of distress and readily taking advantage of them.

Without the pomp and circumstance of traditional academia, without the huge sprawling campus, the sports teams, the fraternities, and the need to stop everything else in their life (for years) in order to obtain their education/degree. Shallow Emotions: When they show what seems to be warmth, joy, love and compassion it is more feigned than experienced and serves an ulterior motive. Outraged by insignificant matters, yet remaining unmoved and cold by what would upset a normal person. Since they are not genuine, neither are their promises.

For Those Of You Who Still Have Doubts About the Student Loan Industry’s TRUE Motives

The list below is courtesy of and can be found @  ForProfitEDU . ForProfitEDU is a HIGHLY  informative website with invaluable information!  I strongly recommend you check it out when you have a chance!

Top Financial Players in EDU

With the growth the industry has maintained over the past decade it is easy to understand why so many firms have established EDU related funds and or practices.  Below are just a few Investment Banks & Private Equity Funds that invest in Education:

Banks with larger Education practices:

BMO

UBS

FBR

Barclays

BA (formerly the Merryl Lynch EDU practice)

Goldman Sachs

Stifel Nicolaus

Credit Swiss

JP Morgan

Piper Jaffray

Signal Hill

William Blair

RBC

Robert W. Baird

PE Firms with EDU investments  & EDU Investment Funds

GE Capital

Alpine Investors LP

ACON Investments

Apax Partners LP

ARC Advisors (HK) Ltd.

Argosy Capital

Arlington Capital

Austin Ventures LP

Boston Ventures

BSG Team Ventures

Camden Partners

Maverick Capital Ltd.

Palm Ventures LLC

Providence Equity

Serent Capital LLC

TA Associates Inc.

Teachers’ Private Capital

Castanea Partners

Charter Oak Capital

Chicago Growth Partners

East Wind Advisors

Fox Hill Capital LLC

GE Capital

Gemini Investors

Halyard Capital

Kohlberg Kravis

LaSalle Capital Group

LLR Partners Inc.

New York Life Capital Partners LLC

Nova Venture Fund Ltd

Primus Capital Funds

RBG Capital Partners

Soros Fund Managemen

Trident Capital LP

Conversion Partners

Epic Partners LLC

Gryphon Investors

Greenhill Capital

Huron Capital Partners

Liberty Partners LP

New Mountain Capital

Sterling Partners

STUDENT LOAN FRAUD ALERT: Fitch Downgrades and Withdraws Ratings on Education Loans Inc., Indenture Trusts

Image via Wikipedia

FYI Education Loans Inc. is ClassNotes Inc. it is also Wachovia Education Finance and they are all now Wells Fargo Education. For those students currently serving a debt life sentence at the WACHOVIA or WELLS FARGO STUDENT LOAN DEBT PRISON it may be worth your time to investigate this further. My gut says that someone found SERIOUS FRAUD in these trusts!

NEW YORK–(BUSINESS WIRE)–Fitch Ratings takes the rating actions described below on Education Loans Inc.’s Student Loan Trusts 1999-1, 2004-1 & 2004-C&D and withdraws all ratings. For these trusts, all ratings of senior and subordinate bonds are downgraded as indicated below except for one tranche which was recently affirmed. In addition, ratings on Education Loans Inc.’s Student Loan Trust 1998-1 and 2005-1 are being withdrawn.

Fitch used its ‘Global Structured Finance Rating Criteria’, ‘U.S. Private SL ABS Criteria’ and ‘FFELP Student Loan ABS Rating Criteria’, as well as the refined basis risk criteria outlined in Fitch’s Sept. 22, 2010 press release ‘Fitch to Gauge Basis Risk in Auction-Rate U.S. FFELP SLABS Review’ to review the ratings.

Each of the 1999-1, 2004-1, 2004-C&D transactions are under significant pressure as losses continue to accumulate at rates above Fitch’s expectations. The trusts are undercollateralized and exhibiting a downward parity trend, particularly for the 2004-C&D and 1999-1 trusts. The trusts are also under pressure due to the high cost associated with the failed auction-rate securities, not allowing the trusts to accumulate asset to build parity.

Fitch is withdrawing all of its ratings assigned to Education Loans Inc.’s Student Loan Trusts following the issuer’s decision to redeem subordinate bonds in the 2004-1 transaction with trust funds, an action which appears to be in breach of the provisions of the trust documents. In addition, the issuer has indicated that it has applied cash from 1999-1 trust accounts to make a payment related to a lawsuit.

These actions took place in late 2009 and during this year and Fitch only became aware of them in recent conversations with the issuer as part of its surveillance review process. These actions were not contemplated in Fitch’s rating analysis and Fitch has determined that it can no longer maintain accurate ratings as a result of such actions.

For the portion of the trusts mentioned above that is backed by private loans, Fitch conducted a review of the collateral performance that involved the calculation of loss coverage multiples based on the most recent data provided by the issuer. A projected remaining net loss amount was compared to available credit enhancement to determine the loss multiples. Fitch derived the expected lifetime net loss based on the projected lifetime net default for each repayment year. Fitch then applied the current cumulative net loss level to determine the expected net loss over the remaining life for the trust. In addition, Fitch applied the most recent 12-month average excess spread rate over the remaining life. Basis risk stresses were also applied to account for the risk associated with the auction-rate securities. The ratings prior to the withdrawal are commensurate with the loss coverage multiples calculated.

Fitch has taken the following rating actions:

Education Loans Inc, – 1998-1 Indenture Trust:

–Class 1D withdrawn;
–Class 1F 6/1/20 withdrawn;
–Class 1H withdrawn;
–Class 1K withdrawn.

Education Loans Inc, – 1999-1 Indenture Trust:

Series 1999-1
–Class A downgraded to ‘BBsf’ from ‘Asf’; withdrawn;
—Class C downgraded to ‘CCCsf’ from ‘Bsf’; withdrawn.

Series 2001-1
–Class A downgraded to ‘BBsf’ from ‘Asf’; withdrawn;
–Class B downgraded to ‘BBsf’ from ‘Asf’; withdrawn;
–Class C downgraded to ‘CCCsf’ from ‘Bsf’; withdrawn.

Series 2002-1
–Class A downgraded to ‘BBsf’ from ‘Asf’; withdrawn;
–Class B downgraded to ‘BBsf’ from ‘Asf’; withdrawn;
–Class C downgraded to ‘CCCsf’ from ‘Bsf’; withdrawn.

Series 2003-1
–Class B downgraded to ‘BBsf’ from ‘Asf’; withdrawn;
–Class C downgraded to ‘BBsf’ from ‘Asf’; withdrawn;
–Class D downgraded to ‘CCCsf’ from ‘Bsf’; withdrawn.

Education Loans Inc, – 2004-1 Indenture Trust:

–Class A1 downgraded to ‘BBBsf’ from ‘AAsf’; withdrawn;
–Class A3 downgraded to ‘BBBsf’ from ‘AAsf’; withdrawn;
—Class A4 downgraded to ‘BBBsf’ from ‘AAsf’; withdrawn;
–Class B1 affirmed at ‘Bsf’; withdrawn.

Education Loans Inc, – 2004-C&D Indenture Trust:

–Class C1 downgraded to ‘BBB-sf’ from ‘AA-sf’; withdrawn;
–Class C2 downgraded to ‘BBB-sf’ from ‘AA-sf’; withdrawn;
–Class C5 downgraded to ‘BBB-sf’ from ‘AA-sf’; withdrawn;
–Class D downgraded to ‘CCCsf’ from ‘Bsf’; withdrawn.

Education Loans Inc, – 2005-1 Indenture Trust:

–Class A3 withdrawn;
–Class B withdrawn.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

–‘Global Structured Finance Rating Criteria’ dated Aug. 13, 2010;
–‘U.S. Private Student Loan Criteria dated Aug. 24, 2009;
–‘Rating US Federal Family Education Loan Program Student Loan ABS’, dated April 11, 2008;
–‘Fitch to Begin Review of U.S. FFELP SLABS Applying Updated Criteria’ dated June 29, 2010;
–‘Fitch to Gauge Basis Risk in Auction-Rate U.S. FFELP SLABS Review’, dated Sept. 22, 2010.

Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=463174
Rating US Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=382306

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE.

UPDATE AND CORRECTION: The List Keeps Growing:The Student Loan Industry’s DIRTY Secret

A special purpose entity (SPE; or, especially in Europe, special purpose vehicle/SPV, in Ireland – FVC financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives. SPEs are typically used by companies to isolate the firm from financial risk. A company will transfer assets to the SPE for management or use the SPE to finance a large project thereby achieving a narrow set of goals without putting the entire firm at risk. SPEs are also commonly used in complex financings to separate different layers of equity infusion. In addition, they are commonly used to own a single asset and associated permits and contract rights (such as an apartment building or a power plant), to allow for easier transfer of that asset. Moreover, they are an integral part of public private partnerships common throughout Europe which rely on a project finance type structure-WIKIPEDIA

IF THIS REMINDS YOU OF THE HOUSING BUBBLE I.E. THE STOREFRONT ,MORTGAGE LENDERS THEN YOU’RE BEGINNING TO UNDERSTAND WHAT’S GOING ON AND WHY YOU’RE DEBT KEEPS GROWING AND GROWING AND GROWING AND GROWING!

Banks partnered with student loan guaranty agencies, student loan servicers, and other banks to create student loan brokerage firms aka student loan special purpose entities the majority of which were incorporated in State of Florida. For example, Student Loan Xpress, Goal Financial, K2 Financial, Education Finance Partners, US Education Finance etc. Kinda like the storefront mortgage companies and unlicensed brokers, think Enron’s LJM2, the Raptors, Chewco etc . 

The bank ffelp lenders, servicers and guaranty agencies used the student loan brokerage companies to access and repeatedly access students’ personal information, nslds, and credit reports for what they claimed were Marketing or Promotional Purposes. If you don’t believe me then just check your credit reports from 2006-2008. I bet you’ll have 3 ‘Promotional Purpose’ pages that are all student loan companies. Unfortunately, they weren’t accessing your reports for marketing purposes as they claimed. They were accessing the reports for your personal information which they unlawfully used to originate federal consolidation loans.

The Education Department’s Office of Inspector General found that American Education Services/Pennsylvania Higher Education Assistance Authority  (CLICK THE LINK I PROMISE IT’S WORTH IT!) received about $33 million in overpayments — and possibly much more — under an exemption in federal law that allowed lenders that financed the student loans they issued using tax-exempt bonds issued before 1993 to earn a government subsidized interest rate of 9.5 percent. Congress engaged in several aborted attempts to fully close the loophole throughout the 1990s and the early part of this decade, but some lenders continued to find ways to take advantage of it by recycling the pre-1993 loan funds, before Congress, as part of the Higher Education Reconciliation Act, finally closed it permanently last year.

Guess how they did it? You guessed it, by partnering with lenders to create student loan brokerage firms, special purpose entities and special purpose vehicles that unlawfully used your personal information to create federal consolidation loans. The lenders then used the fraudulent consolidations loans to replace loans that defeased, were repaid or discharged in their 9.5 percent floor loan securitized trusts and student loan revenue bonds. Consequently, because the federal consolidation loans were unlawfully created by the student loan brokerage firms (lenders + servicers + guaranty agencies) theft of your personal information they are not valid obligations; thus they are not enforceable! So, in protest of the nearly $1 trillion dollar student loan debt bubble and your ASTRONOMICAL student loan debt that’s growing bigger by the day pull your NSLDS report highlight that fraudulent loan, complete an UNAUTHORIZED SIGNATURE / UNAUTHORIZED PAYMENT false certification discharge form, and send it to fraudnet@gao.gov!

Don’t forget to name your lender, servicer, and guaranty agency on the discharge form and attach your NSLDS report with showing the fraudulent consolidation loan you never applied for or agreed to!

So without further ado here are a few of the Student Loan Special Purpose Entities that you should LOOK FOR ON YOUR CREDIT REPORTS. Please note this list is a daily work in progress and by no means complete:

National Collegiate Trust/                                                         PHEAA/American Education Services

American Educational Loan Services                               PHEAA/American Education Services

MRU HOLDINGS:                                                                             J.P. Morgan Chase, Key Bank, Morgan Stanley,

                                                                                                                       Lehman Bros, Assured Guaranty,

                                                                                                                        Global Securitization Service, LLC,

Sallie Mae	J.P. Morgan Chase, Bank of America, J.C. Flowers & Co., Friedman Fleischer & Lowe.
First National	Wachovia
First Savings	Wachovia
Affinity Direct d/b/a Educational Direct	Citibank Student Loans
Credit Card Protection	Bain Capital Ventures Bain Private Equity
CORTRUST Bank	Citibank
Academic Funding Foundation	Educaid/ Wachovia/ Class Notes Inc
Erie Processing Corp	Wachovia
Xanthus Higher Education	ABN AMRO
Student Loan Processors	US Bank
K2 Financial	Ceigis LLC ACS-Education Discover
University Financial Lenders	Bank of New York
Educational Lending Group	Citibank
Post Collegiate Financial	First American Title Ins. Wachovia
Federal Family Education	Wachovia Securities
Goal Financial	Cit Group/Bank of New York
American Educational Loan Processing	PHEAA/ American Education Services
Student Loan Xpress	Bank of Lake Mills, Citibank, AMACAR, HedgeForum Renaissance Education Finance Partners
Education Finance Partners	ACS Inc
PHEAA/American Education Services	Citibank Wachovia
Academic Finance Corporation	ACS/ US Bank
Amerifund Education Corporation	ACS/ Fifth Third/ RBC Bank/ US Bank
Ardent Financial, LLC/NSL Direct	Citibank
US Education Finance	PHEAA/ AES, ACS, Citibank, Wachovia
Academic Financial Services	ACS
Acapita Education Finance Corporation	ACS/ US Bank
AMS Education	ACS/ Bank One/ Sallie Mae Fleet National Bank
Student Capital Corporation	ACS/ Deutsch/ Bank of New York/ P Morgan Chase/ Citibank
Studentloans.com	ACS/ Brazos/ Wells Fargo
Bosque HEA	AES/ Wells Fargo Bank/ ACS
Pecos Student Finacnial Corp	AES/ US Bank
us Education Finance Corporation	AES
US Contracting Corp	PHEAA/ AES
American Educational Services	PHEAA/ AES
Education Funding Resources	Cit Group
Education Lending Group	Cit Group
Education Finance Partners	ACS/ Cit GROUP/ HedgeForum Renaissance Wachovia AMACAR
Grad Partners	Student Loan Xpress/ Education Lending Group Cit Group

UBS Settlement Marks Widening Criminal Investigation Into Municipal Bonds

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BLOOMBERG-By William Selway and Martin Z. Braun – May 6, 2011 11:31 AM ET

A UBS AG (UBSN) banker wanted to win an investment deal with a Rhode Island municipality that was to be awarded to the highest bidder. Instead of offering the best price, he secretly split half of UBS’s $1.4 million profit with another bank to get the rival to back off.

The 2002 transaction with the unidentified municipality, described in documents tied to UBS’s $160 million settlement with the U.S. Justice Department and the Securities and Exchange Commission this week, shows the expanding arc of a criminal investigation that has taken more than four years.

“My guess is they’re going to be looking at the other big banks next,” said Mark Rosman, a partner at the law firm Wilson Sonsini Goodrich & Rosati in Washington and a former assistant chief of the national criminal enforcement section of the Justice Department’s antitrust division.

UBS followed Bank of America in settling a probe prosecutors say spanned more than a dozen Wall Street banks, insurers and advisers. Settlement documents and court records cite several unidentified companies, a sign that more cases are coming.

‘Active and Ongoing’

“The investigation is active and ongoing,” said Christine Varney, the Justice Department’s antitrust chief, in a press conference May 4. “When every municipality that has been victimized by this conspiracy receives restitution, we will conclude.”

The case has revealed that Wall Street, during the same years when it was sowing the seeds of the financial crisis, was also cheating cities, states and school districts across the U.S. and using the unregulated derivatives markets to hide the kickbacks paid in the schemes.

UBS, whose settlement came after four of its former bankers were charged in the case. One of them, Mark Zaino, last year pleaded guilty to fixing prices when brokering municipal- investment deals by submitting intentionally losing bids at auctions run by Los Angeles-broker CDR Financial Products. UBS allegedly entered into separate trades with another bank that were used to funnel kickbacks to CDR. Zaino agreed to cooperate in the probe.

The Justice Department also indicted Peter Ghavami, the former co-head of UBS’s municipal derivatives group and two colleagues, Gary Heinz and Michael Welty. The three are fighting the charges.

Returning Money

UBS has been cooperating with the probe and, as part of the agreement, is returning money to about 100 municipalities in 36 states that were victims of the conspiracy. Bank of America also agreed to cooperate with federal investigators in exchange for leniency.

UBS, Switzerland’s largest bank, is also among 16 banks under investigation by European antitrust regulators, who are probing whether they manipulated the daily London interbank offered rate, a benchmark lending rate.

In November, James Hertz, a former JPMorgan Chase & Co. (JPM) banker also admitted involvement, and agreed to cooperate. Three former employees of a General Electric Co. (GE) unit are fighting charges in the case.

JPMorgan, in a quarterly filing today, said it was cooperating with the bid-rigging investigations by the Justice Department and SEC, as well as the U.S. Internal Revenue Service and Office of the Comptroller of the Currency. The New York- based bank said it wanted to resolve the probes “on a negotiated basis.”

Competitive Bidding

The government investigation centers on the investments that cities, towns and states make with a portion of the $400 billion they raise by selling bonds each year. The investments allow them to earn a return on the borrowed money until they need the cash, which reduces the cost of public works projects.

Federal regulations encourage local officials to award the investment contracts by competitive bidding. Localities rely on previously unregulated financial advisers to run the auctions.

The Justice Department alleges financial companies paid kickbacks to advisers to run sham auctions so they could win the public money to invest at below-market rates. Court records also show that the banks used the derivatives market, which at the time was largely unregulated, to funnel kickbacks to advisers in return for rigging the bidding.

UBS, which got out of the municipal-bond underwriting business in 2008, ran auctions for the investment contracts on behalf of its customers and also bid at auctions run by others.

In one instance described in the SEC’s complaint against UBS, the bank allowed an investment-contract seller –identified only as Provider C — to pick up an additional $100,000 on a transaction with a Colorado health-care provider.

In return, UBS received an additional fee of $75,000 from the winner, which a banker described as “some profit sharing,” according to the SEC complaint.

To contact the reporters on this story: William Selway in Washington at wselway@bloomberg.net; Martin Braun in New York at mbraun6@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

ANOTHER RED FLAG THAT The Student Loan Bubble is about to BURST!

STUDENT LOANS

UNITED WE STAND, DIVIDED WE FALL! In protest of the nearly $1 trillion dollar student loan debt bubble and your ASTRONOMICAL student loan debt that’s growing bigger by the day!Apply for an UNAUTHORIZED SIGNATURE / UNAUTHORIZED PAYMENT false certification loan discharge  The nearly $1 trillion dollar student loan debt, the $1500/month interest only payment, the double in some cases almost triple outstanding principle amount owing, etc. is due to the following:

Bank FFELP lenders partnered with loan guaranty agencies and student loan servicers to create student loan brokerage firms aka special purpose entities the majority of which were incorporated in State of Florida. For example, Student Loan Xpress, Goal Financial, K2 Financial, Education Finance Partners, US Education Finance etc. Kinda like the storefront mortgage companies and unlicensed brokers, think Enron’s LJM2, the Raptors, Chewco etc .  The bank ffelp lenders, servicers and guaranty agencies used the student loan brokerage companies to access and repeatedly access students’ personal information, nslds, and credit reports for what they claimed were Marketing or Promotional Purposes. If you don’t believe me then just check your credit reports from 2006-2008. I bet you’ll have 3 ‘Promotional Purpose’ pages that are all student loan companies.

Unfortunately, they weren’t accessing your reports for marketing purposes as they claimed. They were accessing the reports for your personal information which they unlawfully used to originate federal consolidation loans. The consolidation loans were then purchased by student loan servicers/guaranty agencies from lenders on the Federal Family Education Loan Program secondary market.  The servicers/guaranty agencies issued tax-exempt bonds to obtain funds to acquire loans.  Billions of such bonds issued prior to October 1, 1993, were outstanding.  The servicers/guaranty agencies  bills the U.S. Department of Education for 9.5 percent special allowance payments on the loans it purchases, holds, and services.  

For example, in April 2003, Nelnet implemented a process (“Project 950”) to increase the amount of its loans receiving special allowance [taxpayer subsidy payments] under the 9.5 percent floor. . . . Nelnet repeated this process many times, increasing the amount of loans it billed under the 9.5 percent floor from about $551 million in March 2003 to about $3.66 billion in June 2004. PHEAA did it too! Guess how they did it? You guessed it, by partnering with lenders to create student loan brokerage firms, special purpose entities and special purpose vehicles that unlawfully used your personal information to create federal consolidation loans. The lenders then used the fraudulent consolidations loans to replace loans that defeased, were repaid or discharged in their 9.5 percent floor loan securitized trusts and student loan revenue bonds. Consequently, because the federal consolidation loans were unlawfully created by the student loan brokerage firms (lenders + servicers + guaranty agencies) theft of your personal information they are not valid obligations; thus they are not enforceable! So, in protest of the nearly $1 trillion dollar student loan debt bubble and your ASTRONOMICAL student loan debt that’s growing bigger by the day pull your NSLDS report highlight that fraudulent loan, complete an UNAUTHORIZED SIGNATURE / UNAUTHORIZED PAYMENT false certification discharge form, and send it to fraudnet@gao.gov!

Don’t forget to name your lender, servicer, and guaranty agency on the discharge form and attach your NSLDS report with showing the fraudulent consolidation loan you never applied for or agreed to!

STUDENT LOAN DEBT PROTEST!

UNITED WE STAND, DIVIDED WE FALL! In protest of the nearly $1 trillion dollar student loan debt bubble and your ASTRONOMICAL student loan debt that’s growing bigger by the day!Apply for an UNAUTHORIZED SIGNATURE / UNAUTHORIZED PAYMENT false certification loan discharge  The nearly $1 trillion dollar student loan debt, the $1500/month interest only payment, the double in some cases almost triple outstanding principle amount owing, etc. is due to the following:

Bank FFELP lenders partnered with loan guaranty agencies and student loan servicers to create student loan brokerage firms aka special purpose entities the majority of which were incorporated in State of Florida. For example, Student Loan Xpress, Goal Financial, K2 Financial, Education Finance Partners, US Education Finance etc. Kinda like the storefront mortgage companies and unlicensed brokers, think Enron’s LJM2, the Raptors, Chewco etc .  The bank ffelp lenders, servicers and guaranty agencies used the student loan brokerage companies to access and repeatedly access students’ personal information, nslds, and credit reports for what they claimed were Marketing or Promotional Purposes. If you don’t believe me then just check your credit reports from 2006-2008. I bet you’ll have 3 ‘Promotional Purpose’ pages that are all student loan companies.

Unfortunately, they weren’t accessing your reports for marketing purposes as they claimed. They were accessing the reports for your personal information which they unlawfully used to originate federal consolidation loans. The consolidation loans were then purchased by student loan servicers/guaranty agencies from lenders on the Federal Family Education Loan Program secondary market.  The servicers/guaranty agencies issued tax-exempt bonds to obtain funds to acquire loans.  Billions of such bonds issued prior to October 1, 1993, were outstanding.  The servicers/guaranty agencies  bills the U.S. Department of Education for 9.5 percent special allowance payments on the loans it purchases, holds, and services.  

For example, in April 2003, Nelnet implemented a process (“Project 950”) to increase the amount of its loans receiving special allowance [taxpayer subsidy payments] under the 9.5 percent floor. . . . Nelnet repeated this process many times, increasing the amount of loans it billed under the 9.5 percent floor from about $551 million in March 2003 to about $3.66 billion in June 2004. PHEAA did it too! Guess how they did it? You guessed it, by partnering with lenders to create student loan brokerage firms, special purpose entities and special purpose vehicles that unlawfully used your personal information to create federal consolidation loans. The lenders then used the fraudulent consolidations loans to replace loans that defeased, were repaid or discharged in their 9.5 percent floor loan securitized trusts and student loan revenue bonds. Consequently, because the federal consolidation loans were unlawfully created by the student loan brokerage firms (lenders + servicers + guaranty agencies) theft of your personal information they are not valid obligations; thus they are not enforceable! So, in protest of the nearly $1 trillion dollar student loan debt bubble and your ASTRONOMICAL student loan debt that’s growing bigger by the day pull your NSLDS report highlight that fraudulent loan, complete an UNAUTHORIZED SIGNATURE / UNAUTHORIZED PAYMENT false certification discharge form, and send it to fraudnet@gao.gov!

Don’t forget to name your lender, servicer, and guaranty agency on the discharge form and attach your NSLDS report with showing the fraudulent consolidation loan you never applied for or agreed to!

Fitch Rates SLC Student Loan Trust: The Student Loan Bubble is Beginning to LEAK!

FYI an OUTLOOK NEGATIVE RATING USUALLY MEANS THEY DISCOVERED FRAUDULENT LOANS IN THE TRUST 

April 28, 2011 02:47 PM Eastern Daylight Time

Fitch Affirms Ratings on SLC Private Student Loan Trust 2006-A

NEW YORK–(BUSINESS WIRE)–Fitch Ratings has affirmed ratings on the Student Loan Corporation (SLC) Private Student Loan Trust 2006-A senior class A, subordinate class B and junior subordinate class C notes issued by the Student Loan Corporation. The Rating Outlook remains Negative. Fitch’s Global Structured Finance Rating Criteria and Private Student Loan Asset-Backed Securities (ABS) Criteria were used to review the transaction. The rating actions are detailed at the end of this press release.

The calculated loss coverage multiples for the class A, class B and class C notes are sufficient to maintain the current ratings. The Outlook remains Negative because of Fitch’s negative view of the private student loan sector in general.

The rating affirmations are based on a loss coverage multiples commensurate with the notes’ current assigned ratings and are based on the collateral performance data as of March 31, 2011. A loss coverage multiple was determined by comparing projected net loss amount to available credit enhancement. Fitch used historical vintage loss data provided by SLC to form a loss timing curve representative of the series 2006-A collateral pool. 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.

Credit enhancement consists of excess spread, a reserve fund, overcollateralization and subordination. Fitch assumed excess spread to be the lesser of the average historical excess spread (earnings on the assets minus interest payments to bondholders and fees) and the most recent 12-month average excess spread, and applied that same rate over the stressed projection of remaining life.

The collateral supporting the SLC Private Student Loan Trust 2006-A note consists entirely of private student. The private student loans are intended to assist individuals in financing their undergraduate or graduate education beyond what the FFELP affords. The private loans are available to students enrolled in or recently graduated from graduate-level certificate or degree programs. Loan proceeds are used by students to finance a portion of the costs of attending law school, medical school, dental school, graduate business school, and other graduate schools, as well as preparing for and taking state bar examinations or participating in a medical residency program.

As of December 31, 2010, Discover Financial Services acquired SLC and its servicing operations for private student loans. SLC, a wholly owned subsidiary of Discover Financial Services, will continue to act as the primary servicer and administrator for the trust and Citibank (South Dakota) National Association will continue to act as sub-servicer.

Fitch affirms the SLC Private Student Loan Trust 2006-A notes as follows:

–Senior class A-4 affirmed at ‘AAAsf’; Outlook Negative;
–Senior class A-5 affirmed at ‘AAAsf’; Outlook Negative;
–Subordinate class B affirmed at ‘AAsf’; Outlook Negative.
–Junior Subordinate class C affirmed at ‘Asf’; Outlook Negative.

Senior class A-3 notes have been paid in full.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:
–‘U.S. Private Student Loan ABS Criteria’ (Aug. 24, 2009);
–‘Global Structured Finance Rating Criteria’ (Aug. 16, 2010).

Applicable Criteria and Related Research:
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=463174
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE.

Student Securities! You and Your Student Loans Belong to an Investor!

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MUST READ Article @ N+1: Bad Education that fully explains Student Loan Asset Backed Securities;  why you’re loan balance is growing every month despite your payments and; why lenders prefer delinquent borrowers and borrowers who default over borrowers who pay on time.

“What kind of incentives motivate lenders to continue awarding six-figure sums to teenagers facing both the worst youth unemployment rate in decades and an increasingly competitive global workforce?

During the expansion of the housing bubble, lenders felt protected because they could repackage risky loans as mortgage-backed securities, which sold briskly to a pious market that believed housing prices could only increase. By combining slices of regionally diverse loans and theoretically spreading the risk of default, lenders were able to convince independent rating agencies that the resulting financial products were safe bets. They weren’t. But since this wouldn’t be America if you couldn’t monetize your children’s futures, the education sector still has its equivalent: the Student Loan Asset-Backed Security (or, as they’re known in the industry, SLABS).

SLABS were invented by then-semi-public Sallie Mae in the early ’90s, and their trading grew as part of the larger asset-backed security wave that peaked in 2007. In 1990, there were $75.6 million of these securities in circulation; at their apex, the total stood at $2.67 trillion. The number of SLABS traded on the market grew from $200,000  in 1991 to near $250 billion by the fourth quarter of 2010…..

Even with the Treasury no longer acting as co-signer on private loans, the flow of SLABS won’t end any time soon. What analysts at Barclays Capital wrote of the securities in 2006 still rings true: “For this sector, we expect sustainable growth in new issuance volume as the growth in education costs continues to outpace increases in family incomes, grants, and federal loans.” The loans and costs are caught in the kind of dangerous loop that occurs when lending becomes both profitable and seemingly risk-free: high and increasing college costs mean students need to take out more loans, more loans mean more securities lenders can package and sell, more selling means lenders can offer more loans with the capital they raise, which means colleges can continue to raise costs. The result is over $800 billion in outstanding student debt, over 30 percent of it securitized, and the federal government directly or indirectly on the hook for almost all of it.

If this sounds familiar, it probably should, and the parallels with the pre-crisis housing market don’t end there……”

Read the rest of the article at NPLUSONE MAG