Correction: Fitch Takes Various Actions on 10 Student Loan VRDN Deals with Underlying Ratings.

NEW YORK -- (This is a revision of a release issued June 15, 2009. It corrects the ratings for the New Mexico Educational Assistance Foundation 2008 Trust Indenture.)

Fitch Ratings places 18 senior and two subordinate tranches on Rating Watch Negative from six variable rate demand notes (VRDN) transactions supported by a liquidity facility. Fitch also downgrades the long-term ratings of four VRDN transactions supported by a letter of credit (LOC) to their relevant LOC provider's long-term rating with a Rating Outlook corresponding to the provider's Outlook, while affirming their short-term ratings. (A full list of rating actions follows at the end of this release.)

The actions follow a re-assessment of risk to VRDN transactions with underlying ratings, particularly with respect to interest rate assumptions on the notes given the potential for a stressed market environment for VRDNs. Regarding transactions placed on Rating Watch Negative, Fitch will conduct a detailed review over the next two months and take rating actions based on each transaction's ability to withstand an adverse rate increase on the notes. Some of the important deal-specific factors relevant for the review will include current parity level, minimum parity level for a cash release, the current excess spread level, maximum interest rate cap, and the bank rate definition. Fitch anticipates downgrades to be two categories or more for the long-term underlying ratings and possibly one or two categories for the short-term ratings. The long-term ratings of LOC transactions are downgraded to the relevant LOC bank rating as it has been determined that the underlying ratings would not be able to support a rating higher than the bank rating.

When sufficient demand exists for a given VRDN, the rate on the note is based on the clearing rate determined by the daily or weekly remarketing. In periods of insufficient demand, clearing rates can rise significantly or the note can be placed to the support provider as a bank bond with a potentially higher rate. In such circumstances, high funding costs can inhibit the transaction from generating excess spread and lead to a declining parity.

Bank bonds are usually indexed to the higher of prime, and Federal Funds Rate plus 50 basis points, with a potentially higher spread depending on triggers and how long they have been bank bonds. The maximum rate cap for each deal ranges from 10% to 25% and is not linked to any net loan rate.

Currently, two of the outstanding VRDN transactions have been put to the liquidity facility as bank bonds, one for more than six months and the other for almost a year. Although VRDN rates for the transactions are relatively low and stable, the rates are subject to potential volatility, both on a systematic and unsystematic (issuer specific) basis. A majority of the collateral for the affected transactions are Federal Family Education Loan Program (FFELP) loans indexed to the commercial paper (CP) rate. Some transactions have significant parity built-up; however, this cannot be relied upon since a cash release can bring down the parity to the minimum required level.

Since the liquidity facility supported transactions do not benefit from full credit support, Fitch will not link the ratings of these transactions to the relevant liquidity bank, and long- and short-term ratings will be based on the underlying transaction's credit quality and ability to withstand stressed market conditions. For transactions with a LOC provider, Fitch has downgraded the long-term ratings to the relevant LOC provider's long-term rating with an Outlook corresponding to the related bank's outlook, and affirms the short-term ratings of all LOC-backed VRDN transactions. Since the LOCs provide both liquidity and credit support, the long- and short-term ratings can be linked to the relevant provider's ratings without the consideration of the underlying transaction.

Fitch places the long- and short-term ratings of the following six student loan VRDN transactions with support from a liquidity facility on Rating Watch Negative:

ALL Student Loan Corp. Series II

--Senior series II-A-1 'AAA/F1';

--Senior series II-A-2 'AAA/F1';

--Senior series II-A-3 'AAA/F1';

--Senior series II-A-4 'AAA/F1';

--Senior series II-A-5 'AAA/F1';

--Senior series II-A-6 'AAA/F1';

--Senior series II-A-7 'AAA/F1';

--Senior series II-A-8 'AAA/F1';

--Senior series II-A-9 'AAA/F1'.

--Senior series II-A-10 'AAA/F1';

--Senior series II-A-11 'AAA/F1';

--Senior series II-A-12 'AAA/F1';

--Subordinate series II-C-1 'AA';

--Subordinate series II-C-2 'AA'.

CollegeInvest - March 1, 1999 Indenture of Trust

--Series 1989 'AAA/F1+';

--Series 1990 'AAA'/F1+.

PHEAA 1995A Trust Indenture

--1995 series A 'AAA/F1'.

PHEAA 1999A Trust Indenture

--1999 series A 'AAA/F1'.

Student Loan Funding Corp. 1998 Indenture of Trust

--Class A-2 at 'AAA/F1+'.

Vermont Student Assistance Corporation 2008 Indenture

--Series 2008 B-1 at 'AAA/F1+'.

Fitch downgrades the long-term ratings, affirms the short-term ratings, and assigns Stable Rating Outlooks to the following four student loan VRDN transactions with support from a LOC provider to its LOC provider's ratings:

Missouri Higher Education Loan Authority, 2008A

--Senior series 2008A-1 to 'A+/F1+' from 'AAA/F1+'; Stable Outlook;

--Senior series 2008A-2 to 'A+/F1+' from 'AAA/F1+'; Stable Outlook.

New Mexico Educational Assistance Foundation 2008 Trust Indenture

--Senior series class A-1 to 'A+/F1+' from 'AAA/F1+'; Stable Outlook;

--Senior series class A-2 to 'AA/F1+' from 'AAA/F1+'; Stable Outlook;

--Senior series class A-3 to 'AA-/F1+' from 'AAA/F1+'; Stable Outlook;

--Senior series class A-4 to 'A+/F1+' from 'AAA/F1+'; Stable Outlook;

--Senior series class A-5 to 'AA/F1+' from 'AAA/F1+'; Stable Outlook.

Rhode Island Student Loan Authority 2008-C Trust

--Class C-1 to 'A+/F1+' from 'AAA/F1+'; Stable Outlook;

--Class C-2 to 'A+/F1+' from 'AAA/F1+'; Stable Outlook;

--Class C-3 to 'A+/F1+' from 'AAA/F1+'; Stable Outlook.

Vermont Student Assistance Corporation 2008-C Indenture

--Class C-1 to 'AA-/F1+' from 'AAA/F1+'; Stable Outlook;

--Class C-2 to 'AA-/F1+' from 'AAA/F1+'; Stable Outlook.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site '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.