OREANDA-NEWS. May 13, 2016. Fitch Ratings affirms the Higher Education Loan Authority of the State of Missouri Series 2010-3 (MOHELA 2010-3), class A notes at 'AAAsf'. The Rating Outlook remains Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The current U.S. sovereign rating is 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: Credit Enhancement (CE) is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of January 2016, total parity is 111.85% (10.59% CE). The trust is a turbo structure; therefore, no cash is released until the note is paid in full.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized at the greater of 0.25% of the pool balance and \\$ 765,485.

Acceptable Servicing Capabilities: Higher Education Loan Authority of the State of Missouri (MOHELA) is responsible for servicing the trust. Pennsylvania Higher Education Assistance Agency (PHEAA) is the backup servicer. Fitch has reviewed the servicing operations of both MOHELA and PHEAA and believes them to be acceptable servicers of FFELP student loans.

RATING SENSITIVITIES
Since the FFELP student loan ABS relies on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults, basis risk, and loan extension risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults, basis shock beyond Fitch's published stresses, lower than expected payment speed, and other factors could result in future downgrades. Likewise, a buildup of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014. Fitch has reviewed this transaction under both the existing and proposed criteria.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.