OREANDA-NEWS. Fitch Ratings affirms the senior student loan asset-backed note issued by the Vermont Student Assistance Corp. 2012-1 class A note at 'AAAsf'. In addition, Fitch affirms the subordinate class B note at 'AAsf'. The Rating Outlook for both notes remains Stable.

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 at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED).

Sufficient Credit Enhancement (CE): While both the senior and subordinate notes will benefit from overcollateralization and future excess spread, the senior note also benefits from subordination provided by the class B note. As of August 2015, senior parity ratio is 107.1% (6.63% CE) and the total parity is 103.7% (3.57% 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 reserve account (0.25% of pool balance or $1,176,783).

Acceptable Servicing Capabilities: Vermont Student Assistance Corporation (VSAC) services 100% of the loans. In Fitch's opinion, VSAC is an acceptable servicer of FFELP student loans. Additionally, Nelnet serves as back-up servicer for this trust.

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

Fitch was not provided due diligence information from any third parties relating to the Vermont Student Assistance Corp. 2012-1.