Fitch Rates AR Student Ln Auth Loan Rev & Rev Rfdg Bonds.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 27, 2000

Fitch rates the following bonds issued by Arkansas Student Loan Authority:

Ratings for new issuance:

          --  $55,000,000 student loan revenue and revenue refunding
            bonds, senior series 2000A-1, `AAA';

          --  $20,000,000 taxable student loan revenue bonds, senior
            series 2000A-2, `AAA'.

Ratings affirmed for outstanding debt:

          --  $31,150,000 senior student loan revenue bonds, series
            1997A, `AAA';

          --  $42,900,000 senior student loan revenue bonds, series
            1996A, `AAA';

          --  $53,400,000 senior student loan revenue bonds, series
            1994A, `AAA';

          --  $17,400,000 subordinate student loan revenue and revenue
            refunding bonds, series 1997B, `A';

          --  $14,000,000 subordinate student loan revenue bonds, series
            1996B, `A';

          --  $6,600,000 subordinate student loan revenue bonds, series
            1994B, `A'.

Fitch rates Arkansas Student Loan Authority senior series 2000 A-1 and 2000 A-2 student loan revenue and revenue refunding bonds `AAA'. In addition, Fitch affirms the `AAA' ratings on ASLA's outstanding bonds as indicated above. All of the debt is issued under an Indenture of Trust adopted Nov. 15, 1994, as amended. The series 2000 bonds are issued under a First Supplemental Indenture effective Sept. 1, 2000. The series 2000 bonds will be used to finance and acquire Federal Family Education Loan Program (FFELP) guaranteed student loans, and to pay costs and fees associated with issuance.

The ratings are based on the collateral quality, the reserve fund, the ability of the transaction to pass stressful cash flow tests at each rating level, and the sound legal structure. The reserve fund is sized at the greater of the sum of 8.0% of the outstanding series 1994 and series 1996 bonds, and 4.0% of the outstanding series 1997 bonds, or 1.0% of the outstanding aggregate amount on all bonds, with a $500,000 minimum. After issuance, there will be approximately $11.3 million held in the reserve fund.

The ratings on the senior bonds are also based upon the 15.8% subordination level provided by the subordinated bonds within the trust. The ratings address the ability of the trust to pay bonds at maturity and pay accrued interest on each payment date. The ratings do not address the ability of auction rate bondholders to successfully redeem their bonds at an auction now or in the future.

The series 2000A-2 bonds are taxable, 28-day auction rate securities with interest payable every 28 days, beginning Oct. 26, 2000 and calculated based on actual number of days elapsed during a 360-day year (Actual/360). The series 2000A-1 bonds are tax-exempt, 35-day auction rate securities with interest payable semiannually, June 1 and Dec. 1, and calculated based on the actual number of days elapsed during a 360-day year (Actual/360). The first interest payment date for the series 2000A-1 bonds is Dec. 1, 2000. The series 2000 bonds have a legal final maturity of June 1, 2030.

The tax-exempt, subordinate series 1994B, series 1996B and 1997B are fixed-rate bonds with legal final maturity dates of June 1, 2009, June 1, 2010, and June 1, 2014, respectively. The tax- exempt, senior series 1994A, 1996A, and 1997A bonds are auction rate bonds (ARBs) with legal final maturity dates of June 1, 2009, June 1, 2010, and June 1, 2014, respectively.

The collateral securing the bonds consists of FFELP student loans. The FFELP loans are guaranteed 100% or 98% by an eligible guarantor and re-insured by the U.S. Department of Education (ED) depending on their disbursement date.

SLGFA (Student Loan Guarantee Foundation of Arkansas) is the primary guarantor and EdSouth Services, USA Servicing, and UNIPAC are the servicers for the student loan portfolio.

Arkansas Student Loan Authority is a body politic and corporate and an instrumentality of the state of Arkansas. ASLA receives, disburses and administers funds exclusively for educational purposes and makes loans to students attending eligible post- secondary institutions.

William R. Hough & Co. is the lead underwriter for the transaction.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.