OREANDA-NEWS. March 30, 2015. Fitch Ratings affirms the Nelnet Student Loan Trust 2013-3 senior notes at 'AAAsf' and upgrades the subordinate notes to 'AAsf' from 'A+sf'. The Rating Outlook remains Stable for both notes.

The upgrade of the subordinate notes is driven by strong static pool performance and amortization of the bonds. Further, the trust has reached and is expected to maintain its target credit enhancement.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral is comprised 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. Fitch rates the U.S. sovereign government at 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC) and excess spread, and for the senior notes, subordination of the class B note. As of February 2014, total parity is 101.01% (1% CE) and senior parity is 104.56% (4.36% CE). The trust has been releasing cash given the Specified Overcollateralization Amount equal to the greater of 1% of the adjusted pool balance and \\$2,000,000 is maintained.

Adequate Liquidity Support: Liquidity support is provided by a reserve account sized at the greater of 0.25% of the outstanding principal balance and \\$765,000, currently equal to \\$1,491,084.36.

Acceptable Servicing Capabilities: Acceptable Servicing Capabilities: Day to day servicing is provided by Nelnet, Pennsylvania Higher Education Assistance Agency (PHEAA) and Xerox Education Services Inc. (XES). In Fitch's opinion, all servicers are acceptable servicers of FFELP student loans.
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 buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Initial Key Rating Drivers and Rating Sensitivity further described in Fitch's April 22, 2013 new issue report .

Fitch has taken the following rating actions:

Nelnet Student Loan Trust 2013-3:
--Class A note affirmed at 'AAAsf'; Outlook Stable;
--Class B note upgraded to 'AAsf' from 'A+sf'; Outlook Stable.