Higher education loans made to students and parents under College Ave.'s in-school private lending will support $361.5 million in student loan asset-backed securities (ABS) through the College Ave Student Loans 2024-A.
Using a traditional pass-through structure, the transaction offers through five tranches of class A, B, C and D notes, most of which are fixed rate, according to ratings analysts at DBRS Morningstar. The notes have a credit enhancement wrap made of overcollateralization throughout the capital structure, subordination on the notes, except the class D, and a reserve account representing 0.50% for the fully funded collateral pool, DBRS analysts said.
Most of the notes will be fixed rate, but the A1B tranche could be benchmarked to the three-month Secured Overnight Financing Rate (SOFR), according to Asset Securitization Report's deal database.
Firstrust Savings Bank and First Citizens Community Bank originated the loans in the pool, and although College Ave's private lending does include refinancings, the entire pool of loans are in the in-school phase, according to DBRS. The collateral is composed of 26,880 loans, 78.8% of which carry a fixed interest rate, with a balance of $13,250 on average, DBRS analysts said.
The pool appears to be high quality, the rating agency said. On a weighted average (WA) basis, the loans have a FICO score of 764 and a remaining term of 120 months. Also, the notes carry a fixed-rate coupon, with benefit, of 12.46%, DBRS said. A co-signer is present on virtually all of the loans in the pool, or 94.5%, and almost all borrowers, 98.3% are attending a four-year school, the rating agency said. While virtually the entire pool is in-school, full deferrals account for 42.75% of the pool, while those requiring a $25 monthly payment account for 30.32%, the rating agency said.
DBRS assigns a AAA rating to the A1A and A1B notes; AA to the class B notes; A to the class C notes and BBB to the class D notes.
