OREANDA-NEWS. Fitch Ratings has affirmed the ratings on the South Carolina Student Loan Corp. (SCSLC) student loan backed notes series 2010-1 issued under the 2010-1 General Resolution as follows:

--Class A-2 at 'AAAsf'; Outlook Stable;

--Class A-3 at 'AAAsf'; Outlook Stable.

The affirmation of the senior class A-2 and class A-3 notes at 'AAAsf' is due to the notes passing cash flow stresses at their respective rating levels. The recommendation to maintain the Stable Outlook is based on the notes performing within expectations.

KEY RATING DRIVERS

U. S. Sovereign Risk: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. Guarantees are provided by the transaction's eligible guarantors and reinsurance is 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 rated 'AAA' with a Stable Outlook by Fitch.

Collateral Performance: Fitch assumes a base case default rate of 11.5% and a 34.3% default rate under the 'AAA' credit stress scenario. The claim reject rate is assumed to be 0.25% in the base case and 2.5% in the 'AAA' case. Fitch applies the standard default timing curve in its credit stress cash flow analysis. The trailing 12 month (TTM) constant default rate, utilized in the maturity stress is 3.4%. The TTM levels of deferment, forbearance, income-based repayment (before adjustment) and constant prepayment rate (voluntary and involuntary) are 13.4%, 15.5%, 15.0%, and 10.6% respectively, which are used as the starting point in cash flow modelling. Subsequent declines or increases are modelled as per criteria. The borrower benefit is assumed to be approximately 0.3% based on information provided by the sponsor.

Basis and Interest Rate Risk: Fitch applies its standard basis and interest rate stresses to this transaction as per criteria.

Payment Structure: Credit Enhancement (CE) is provided by overcollateralization and excess spread. As of the June 2016 distribution report, parity is 108.4% (7.8% CE). Liquidity support is provided by a reserve account sized at the greater of 0.25% of the pool balance, and 0.1% of the initial pool balance. As of June 2016, the debt service reserve fund balance is approximately $1,255,926. The trust is in turbo, and cash cannot be released from the trust until the notes have been paid in full.

Maturity Risk: Fitch's SLABS cash flow model indicates that the 2010-1 notes are paid in full on or prior to their respective legal final maturity in Fitch's 'AAA' credit and maturity stresses.

Operational Capabilities: South Carolina Student Loan Corporation is servicing 100% of the loans. In Fitch's opinion, South Carolina Student Loan Corporation is an acceptable servicer of FFELP student loans.

Under Fitch's 'Counterparty Criteria for Structured Finance and Covered Bonds', dated June 18, 2016, Fitch looks to its own ratings in analyzing counterparty risk and assessing a counterparty's creditworthiness. The definition of permitted investments for this deal allows for the possibility of using investments not rated by Fitch, which represents a criteria variation. Fitch doesn't believe such variation has a measurable impact upon the ratings assigned.

Under Fitch's criteria 'Rating U. S. Federal Family Education Loan Program Student Loan ABS Criteria', dated July 26, 2016, Fitch does not address the process by which it gives certain credit to short-term assets in its cash flow analysis, and it is therefore considered a criteria variation.

RATING SENSITIVITIES

Since FFELP student loan ABS rely 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 and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a build-up of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

DUE DILIGENCE USAGE

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