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Fitch Affirms SLC Student Loan Trust 2009-3.

New York: Fitch Ratings affirms the SLC Student Loan Trust 2009-3 senior notes at 'AAAsf'. The Rating Outlook remains Stable.


U.S. Sovereign Risk: The trust collateral comprises 100% Federal Family Education Loan Program (FFELP) loans, with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The U.S. sovereign rating is currently 'AAA'/Outlook Stable.

Collateral Performance: Based on transaction specific performance to date, Fitch maintained the sustainable constant default rate assumption of 2.8% and marginally revised its sustainable constant prepayment rate (voluntary and involuntary) assumption from 9.1% to 9.0%. The claim reject rate is assumed to be 0.5% in the base case and 3.0% in the 'AAA' case. As of June 2018 distribution date, the TTM average levels of deferment, forbearance, income-based repayment (prior to adjustment) are approximately 6.5%, 13.7% and 15.9%, respectively, in line with Fitch's expectations.

Fitch views notes with legal final maturities beyond 2035 to pose low maturity risk, since nearly all of the income-based repayment loans are expected to be forgiven between 2036 and 2041. With a legal final maturity dates of Dec. 15, 2043, Fitch believes the maturity risk is minimum for the notes.

Basis and Interest Rate Risk: Basis risk for this transaction arises from any rate and reset frequency mismatch between interest rate indices for SAP and the securities. As of May 2017, more than 99% of the assets and all notes are indexed to one-month LIBOR. Fitch applies its standard basis and interest rate stresses to this transaction as per criteria.

Payment Structure: Credit Enhancement (CE) is provided by excess spread and overcollateralization. As of the June 2018 distribution report, total parity is 107.53% (7.00% CE). Liquidity support is provided by a reserve account currently sized at the floor of $2,095,557. Cash will continue to be released as long as the target CE level of 7.00% is maintained.

Operational Capabilities: Day-to-day servicing is provided by Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.). Fitch believes Navient to be an acceptable servicer, due to its extensive track record as the largest servicer of FFELP loans.


Fitch's rating sensitivity is focused on how ratings could be affected when the agency's assumptions change. The ratings assigned to senior tranches of most FFELP securitizations will likely move in tandem with the U.S. sovereign rating given the strong linkage to the U.S. sovereign, by nature of the reinsurance provided by the ED, unless Fitch determines the deal's CE sufficient to cover defaults and the losses of SAP and ISP from ED on its own.

There have been no material changes to the credit and maturity risk profiles for this transaction. As such, a significant deviation in performance or CE level would have to occur within the asset pool to have potential impact on outstanding ratings.


Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Oct 11, 2018
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