Tag Archives: Federal Family Education Loan Program

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

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Filed under 9.5 percent, 9.5 percent SAP, American Education Services, federal direct loans, federal financial aid, FFELP, for-profit colleges, for-profit schools, fraud, higher education, muni bond fraud, muni bond probe, municipal bonds, PHEAA, PLUS, Stafford, student loan lenders, student loan program, student loan scandal, student loans, Uncategorized

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

Wells Fargo in Laredo, Texas, is located near ...

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.

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Filed under 9.5 percent, 9.5 percent SAP, American Education Services, federal direct loans, federal financial aid, FFELP, for-profit colleges, for-profit schools, fraud, higher education, muni bond fraud, muni bond probe, municipal bonds, PHEAA, PLUS, Stafford, student loan lenders, student loan program, student loan scandal, student loans, Uncategorized

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!

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Filed under 9.5 percent, 9.5 percent SAP, federal direct loans, FFELP, for-profit colleges, for-profit schools, PLUS, Stafford, student loan lenders, student loan program, student loan scandal, student loans, Uncategorized

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!

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Filed under 9.5 percent, 9.5 percent SAP, federal direct loans, FFELP, for-profit colleges, for-profit schools, PLUS, Stafford, student loan lenders, student loan program, student loan scandal, student loans, Uncategorized

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.

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Filed under 9.5 percent, 9.5 percent SAP, federal direct loans, FFELP, for-profit colleges, for-profit schools, PLUS, Stafford, student loan lenders, student loan program, student loan scandal, student loans, Uncategorized

STUDENT LOAN DEBT PROTEST!

Texas Guaranteed Student Loan Corp. Image by D...

Image via Wikipedia

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!

UNITED WE STAND, DIVIDED WE FALL!!!

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Timeline-Student Loan Program

Federal Student Loan Program

The federal government began guaranteeing student loans provided by banks and non-profit lenders in 1965, creating the program that is now called the Federal Family Education Loan (FFEL) program. The first federal student loans, however, provided under the National Defense Education Act of 1958, were direct loans capitalized with U.S. Treasury funds, following a recommendation of economist Milton Friedman. But when Congress wanted to expand on that start, budget rules made the guarantee approach seem more attractive.[1]

A number of programs were introduced over the next few years, all with the purpose of making it easier to get an education. A few of those programs are:

  • The Health Education Assistance Act, 1963, which offered loans to medical and health program students.
  • The College Work-Study Program, 1964 (now called the Federal Work-Study Program). In this program, the federal government pays for most of students’ earnings so, in effect it covers their educational expenses.
  • The Educational Opportunity Grant Program, 1965, which was created specifically for low-income students who couldn’t afford college. No repayment was required.
  • The Guaranteed Student Loan (GSL) Program, 1965, which is also still in effect today. It’s name was changed in 1988 to the Federal Stafford Loan Program. This program provided more money for student loans through banks or lending agencies, to offset rising education costs.
  • The Middle Assistance Act, 1978, provided student loans to middle-class families. This act, in effect, removed the income limit on federal aid programs.
  • The Parent Loans for Undergraduate Students Program, 1981, allowed upper-income families to get student loans, but at much higher interest rates.[2] In the same year, Congress created the loan consolidation program so that borrowers could consolidate multiple loans into a single loan with a longer repayment term and smaller monthly payments
  • 1988—Guaranteed Student Loans were renamed Stafford Loans in honor of Senator Robert Stafford of Vermont.
  • 1989—Student Loan borrowers were first required to receive financial counseling from schools before borrowing.
  • 1991—Congress prohibited schools with high default rates from participating in the Guaranteed Student Loan Program.
  • 1992—Guaranteed Student Loan Program was renamed the Federal Family Education Loan Program (FFELP) in the 1992 HEA reauthorization. Today, FFELP is a public-private partnership that provides affordable private sector financing for students and their families seeking postsecondary education.
  • 1993—After one year as a pilot program in the 1992 HEA reauthorization, the Federal Direct Loan Program (FDLP) became a full-scale program in 1993. In FDLP, loans are financed by the federal government.
  • 1999    Direct Lending introduces loan discounts (1% reduction in origination fees and 0.25% interest rate reduction for auto debit) to compete with loan discounts offered by FFELP lenders. (June 16, 1999)
  • 2000    Lenders sue the US Department of Education to try to block the Department from offering loan discounts to Direct Loan borrowers without offering similar discounts to FFEL borrowers. The lenders also questioned whether the discounts are cost neutral, as required by the Higher Education Act. The Department believes that these reductions will save the government money by preventing defaults, save students money by reducing costs, and are necessary to level the playing field. Many lenders already offer similar discounts. (November 7, 2000)
  • 2002 Public Law 107-139 (February 8, 2002) changed education loan interest rates from variable rates to fixed rates for new loans issued after July 1, 2006. The interest rate on Stafford Loans will be 6.8%. The interest rate on PLUS Loans will be 7.9%.
  • 2005    Section 220 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), P.L. 109-8 amended the US Bankruptcy code at 11 USC 523(a)(8) to include an exception to discharge for “qualified education loans”. Previously only private student loans made by a nonprofit institution (as well as federal education loans) were excepted from discharge.
  • 2005    Higher Education Reconciliation Act of 2005 (HERA 2005) (part of the Deficit Reduction Act of 2005) cuts $12.7 billion from student aid: switches Stafford and PLUS interest rates to fixed rates of 6.8% and 8.5% (an increase from P.L. 107-139), keeps maximum Pell Grant at $4,050 for fourth year in a row, gradually reduces loan fees from 4% to 1%, increases some annual loan limits without increasing cumulative loan limits, changes financial aid treatment of prepaid tuition plans, allows graduate and professional students to borrow PLUS loans, eliminates floor income guarantee and some 9.5% loan recycling, adds SMART Grants for less than 10% of Pell Grant recipients, repeals early repayment status loophole, and adds restrictions to School as Lender, among other changes.
  • 2007 New York Attorney General’s investigation uncovered lender-college revenue sharing agreements, referral fees and other conflicts of interest lead to multi-million dollar settlements by the largest education lenders. Prominent financial aid administrators and a US Department of Education official accepted stock holdings and payments received from lenders.
  • 2008 Congress passed the Ensuring Continued Access to Student Loans Act of 2008 (P.L. 110-227), known as ECASLA, to help avert a crisis in the FFEL program. This legislation allows the US Department of Education to buy unemcumbered Stafford and PLUS loans originated from 10/1/03 to 9/30/09. The legislation also increased the annual and aggregate loan limits on the unsubsidized Stafford loan for undergraduate students and allows parents to defer repayment on the Parent PLUS loan while the student is in school and for six months afterward. Congress also passed the Ensuring Continued Access to Student Loans Act Extension (P.L. 110-350) to extend ECASLA to the 2009-10 academic year.
  • 2008 Congress finally reauthorized the Higher Education Act of 1965 after more than a dozen extension acts. The Higher Education Opportunity Act of 2008 (PL 110-315) added numerous new disclosure requirements including the Student Loan Sunshine Act. Other significant changes include veterans’ education benefits will no longer be treated as a resource starting in 2010-11, expands the cohort default rate from a two-year to a three-year window, establishes three new up-front loan forgiveness programs, requires education lenders to report repayment status information to all national consumer credit reporting agencies, authorizes a simplified EZ FAFSA form, requires standardization of the financial aid award letter, and softens the 90/10 rule.
  • 2010 The Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) was passed by the House and Senate on March 25, 2010 along party lines and signed into law by President Obama on March 30, 2010. The bill eliminates the federally-guaranteed student loan program (FFELP), with all new federal education loans made through the Direct Loan program starting July 1, 2010. The savings are redirected to the Pell Grant program, deficit reduction, improvements in income-based repayment and a variety of smaller programs. Most of the Pell Grant funding was used to backfill a funding shortfall from the American Recovery and Reinvestment Act of 2009 (stimulus bill) and to make permanent the increased maximum Pell Grant from that legislation. The rest of the Pell Grant funding indexes the maximum Pell Grant to the Consumer Price Index for five of the ten years, with the maximum Pell Grant unchanged for the remaining five years. The legislation cuts the monthly payment under income-based repayment by one third from 15% of discretionary income to 10% of discretionary income, and accelerates the loan forgiveness from 25 years to 20 years, but only for new borrowers of new loans made on or after July 1, 2014.[3]

[1] New America Foundation Federal Student Loan Programs – History

[2] Financial Shopper Network The History of Student Loans

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Filed under 9.5 percent, 9.5 percent SAP, federal direct loans, FFELP, PLUS, Stafford, student loan lenders, student loan program, student loan scandal, student loans