OREANDA-NEWS. Fitch Ratings has affirmed the SLM Student Loan Trust 2003-10 senior notes at 'AAAsf'. The Rating Outlook remains Stable for the A-2 and A-3 classes, and a Negative Outlook has been assigned to class A-4. The Outlook revision is driven by increased default assumptions.

Fitch has also upgraded the subordinate notes to 'BBBsf' and assigned a Positive Outlook. The upgrade is driven by the increasing benefit of the Yield Supplement Account as the bonds amortize.

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 Outlook Stable.

Sufficient Credit Enhancement: While both the senior and subordinate notes will benefit from future excess spread, the senior notes also benefit from subordination provided by the class B note. As of February 2015, total parity is 100.00% and senior parity is 104.51% (4.32% CE). Cash is being released from the trust given that the 100% target parity level is maintained.

Adequate Liquidity Support: Liquidity support is provided by a reserve account equal to the greater of 0.25% of the pool balance and \$ 3,012,925, currently sized at \$5,219,094. In addition, a \$25,000,000 Yield Supplement Account is available to cover any interest and principal shortfalls.

Acceptable Servicing Capabilities: Sallie Mae Inc., as servicer, is responsible for servicing the trust. Fitch believes Sallie Mae is an acceptable servicer 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.

Fitch has taken the following rating actions:

SLM Student Loan Trust 2003-10:
--Class A-2 affirmed at 'AAAsf'; Outlook Stable;
--Class A-3 affirmed at 'AAAsf'; Outlook Stable;
--Class A-4 affirmed at 'AAAsf'; Outlook to Negative from Stable;
--Class B upgraded to 'BBBsf' from 'BBsf'; assigns Outlook Positive.