Fitch Rates Montana Higher Education Student Assistance Corp.'s $178MM Issuance.

NEW YORK -- Fitch Ratings assigns ratings to the following student loan revenue bonds issued by Montana Higher Education Student Assistance Corporation (MHESAC) and confirms ratings on the following outstanding debt:

Ratings assigned to new issuance:

-- $83,000,000 student loan revenue bonds, senior series 2004-A, 'AAA';

-- $83,000,000 student loan revenue bonds, senior series 2004-B, 'AAA';

-- $12,000,000 student loan revenue bonds, subordinate series 2004-C, 'A';

Ratings confirmed on outstanding debt:

-- $56,700,000 student loan revenue bonds, senior series 1995-A, 'AAA';

-- $56,600,000 student loan revenue bonds, senior series 1995-B, 'AAA';

-- $56,600,000 student loan revenue bonds, senior series 1995-C, 'AAA';

-- $79,800,000 student loan revenue bonds, senior series 1998-A, 'AAA';

-- $81,500,000 student loan revenue bonds, senior series 1999-A, 'AAA';

-- $50,000,000 student loan revenue bonds, senior series 2000-A, 'AAA';

-- $50,000,000 student loan revenue bonds, senior series 2000-B, 'AAA';

-- $11,200,000 student loan revenue bonds, senior series 2000-C, 'AAA';

-- $84,200,000 student loan revenue bonds, senior series 2001-A, 'AAA';

-- $ 25,000,000 student loan revenue bonds, senior series 2001-B, 'AAA';

-- $29,500,000 student loan revenue bonds, senior series 2001-C, 'AAA';

-- $53,800,000 student loan revenue bonds, senior series 2002-A, 'AAA';

-- $29,000,000 student loan revenue bonds, senior series 2002-B, 'AAA';

-- $9,100,000 student loan revenue bonds, senior series 2002-C, 'AAA';

-- $10,300,000 student loan revenue bonds, senior series 2002-D, 'AAA';

-- $80,200,000 student loan revenue bonds, senior series 2003-A, 'AAA';

-- $80,100,000 student loan revenue bonds, senior series 2003-B, 'AAA';

-- $13,300,000 student loan revenue bonds, senior series 2003-C, 'AAA';

-- $25,100,000 student loan revenue bonds, subordinate series 1995-D, 'A';

-- $5,000,431 student loan revenue bonds, subordinate series 1995-E, 'A';

-- $27,970,000 student loan revenue bonds, subordinate series 1998-B, 'A';

-- $20,350,000 student loan revenue bonds, subordinate series 1999-B, 'A';

-- $ 8,180,000 student loan revenue bonds, subordinate series 2000-D, 'A';

-- $15,000,000 student loan revenue bonds, subordinate series 2002-E, 'A'.

The ratings are based on the quality of the student loan portfolio, the credit enhancement provided, and the sound legal structure of the trust. The collateral consists entirely of Federal Family Education Loan Program (FFELP) student loans. In addition, the ratings on the senior notes benefit from the subordination provided by the subordinate notes.

The ratings address the ability of the trust to pay bond principal at the legal final maturity and pay timely interest. The ratings do not address any carryover amounts that may accrue on the bonds nor do they address the ability of auction-rate bondholders to successfully redeem their bonds at an auction now or in the future.

The series 2004-A, 2004-B, and 2004-C bonds represent the ninth issuance from the indenture of trust dated Aug. 1, 1993 and are issued under the 10th supplemental indenture of trust dated Nov. 1, 2004. The series 2004-A, 2004-B, and 2004-C bond proceeds will be used to acquire or originate FFELP student loans, refund a portion of subordinate series 1998-B, 1999-B, and 2000-D bonds, make a deposit to the administration fund, and pay costs of issuance.

The series 2004-A, 2004-B, and 2004-C bonds are tax-exempt, 35-day auction-rate securities. Interest is payable on the first business day following the end of each interest period. The legal final maturity dates for the series 2004-A, 2004-B, and 2004-C bonds are Dec. 1, 2038.

At closing, the collateral securing the notes consists of 100% FFELP loans, which are guaranteed 98% or 100%, depending on their origination date, by an eligible guarantor and re-insured by the U.S. Department of Education.

MHESAC is a nonprofit organization created in July 1980 and designated by the governor of Montana as the sole and exclusive nonprofit corporation in the state to provide a statewide student loan acquisition program and lend directly to student borrowers in connection with the guaranteed student loan program under the Higher Education Act of 1965. The corporation is a tax-exempt corporation under sections 501(c)(3) and 150(d) of the Internal Revenue Code. MHESAC is affiliated with the Student Assistance Foundation of Montana (SAF) through a management and servicing agreement.

SAF and Sallie Mae Servicing service the loan portfolio. SAF services the Montana-nexus student loans and Sallie Mae Servicing, through a subservicing agreement, services all other student loans financed.