OREANDA-NEWS. Fitch Ratings has affirmed the senior notes for SLM Student Loan Trust 2010-1 at 'AAAsf' and subordinate note at 'Asf'. Fitch has revised the Rating Outlook for the senior and subordinate notes to Negative from Stable.

The Outlook revision for the senior notes is due to Fitch's belief that the notes carry a heightened level of extension risk. Based on Fitch's cash flow modelling runs, the notes were not paid in full by their legal final maturity date of March 25, 2025 in a stressed scenario. Under such scenarios, this may result in a technical default, although Fitch would expect ultimate repayment of full principal and interest afterwards. If a default occurs for the senior notes, it is highly likely that the subordinate notes will not receive timely interest, as the principal for the senior notes must be paid in full prior to the subordinate notes receiving interest. Therefore, the Rating Outlook on the subordinate note has been revised to Negative.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% 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: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. Additionally, the senior note also benefits from subordination provided by the class B note. As of August 2015, total parity is 100.96% (0.95% CE) and senior parity is 110.22% (9.28% CE). Cash is being released from the trust given that the $3 million overcollateralization amount is maintained.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of the pool balance, and $1,211,252.

Acceptable Servicing Capabilities: Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.), as servicer, will be responsible for servicing the portfolio. Fitch has reviewed the servicing operations of Navient Solutions and believes it to be acceptable servicer 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 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 CE 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.

Fitch has affirmed the following:

SLM Student Loan Trust 2010-1:
--Class A at 'AAAsf';
--Class B at 'Asf'.

The Rating Outlook has been revised to Negative from Stable.