EDvestinU Prepares $182.7M Student Loan ABS

A pool of private in-school student loans and student loan refinances has been created by EDvestinU of the New Hampshire Higher Education Loan Corp. The trust, EDvestinU Private Education Loan Issue No. 4, is expected to issue approximately $182.7 million in notes.

The transaction is NHHELCO’s third to securitize a pool of refinanced student loans, as well as the third to securitize loans issued solely under the EDvestinU program, according to Morningstar | DBRS.

EDvestinU will issue Notes through a sequential payment structure, in which the Trust will pay no principal to the Subordinated Class B Notes until the Class A Notes are paid in full. In another structural feature, a turbo feature, the trust will not release available funds which will be released and redemption of the notes will be accelerated.

Another important feature, the Class A Notes will benefit from the Class B Note Interest Trigger, according to DBRS. If the assets of the estate in trust less the outstanding Class A Notes balance are less than $8 million, the Trust will suspend interest payments on the Class B Notes. Any unpaid interest on the Class B Notes Class B notes will accrue at the Class B note interest rate and be paid on a later distribution date, the rating agency said.

The rating agency notes that the fiduciary guarantee has high credit characteristics. On a weighted average (WA) basis, borrowers have an income of $119,676, a debt-to-equity ratio for refi loan borrowers of 26.8%, and an initial credit score of 781.

In a positive potential credit, DBRS noted that borrowers of refinanced loans have been employed and making payments on the underlying loans for a long time. So they have a lower likelihood of defaulting compared to more typical student borrowers who might still be in school or just starting to repay.

DBRS expects to assign ratings of “AAA” to the $161.7 million Class A Notes and “A” to the $21 million Class B Notes. S&P Global Ratings intends to assign similar ratings.

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