Navient Corp.’s next securitization of loan refinancing the debt of college graduates has less exposure to borrowers with advanced degrees, according to rating agency DBRS.

Just 66% of the collateral for Navient Private Education Refi Loan Trust 2018-C consists of loans to borrowers with graduate, medical, law or other advanced degrees. By comparison, nearly 72% of loans backing the sponsor’s 2018-A transaction, completed in February, had advanced degrees.

(Navient’s second student securitization of the year, Navient Private Education Loan Trust 2018-B2018-B, is less comparable because it was backed by a mix of refinance loans and loans made to borrowers while they were still in school. The 2018-B transaction was not rated by DBRS.)

All of the loans backing the latest transaction were made by Earnest, which Navient acquired late in 2017, to borrowers who had already graduated or were set to graduate within six months of issuance and are employed o presented evidence of employment upon graduation. They therefore have a lower likelihood of defaulting compared with more typical student loan borrowers that may be in school or just entering repayment.

However, graduates with advanced degrees, and in particular medical or dental degrees, are considered to be among the best credits demonstrate significantly lower unemployment rates compared with the vast majority of other occupations, according to U.S. Bureau of Labor Statistics data cited by DBRS. “Unemployment rates for those in the medical field are among the lowest for all occupations and are expected to remain low as the health-care sector has been steadily expanding,” the presale report states.

And the 2018-C transaction has exposure to fewer of these than the 2018-A transaction.

Of the graduate school borrowers, approximately 29.6% (by outstanding principal balance) have a medical degree and have a weighted average income of approximately $260,842; another 15.9% have graduated from law school and have a weighted average income of approximately $145,013; and 11.7% hold an MBA degree and have a weighted average income of approximately $138,083.

Notwithstanding the lower percentage of borrowers with advanced degrees, the credit characteristics of the pool are broadly similar to those of borrowers in the 2018-A transaction. The average balance of loans backing the new deal is slightly lower at $42,042 (vs $74,007); the weighted average borrower income is also slightly lower at $135138 (vs $137,946). The weighted average borrower age is 32 (vs 31). And the same percentage, 99.7%, are in active repayment.

A total of the $631.9 million of notes will be issued in the transaction. DBRS expects to assign an AAA to the two senior tranche of notes to be issued, and an AA to a subordinate tranche of class B notes – on par with the 2018-A transaction. The trust will also issue a tranche of unrated Class R certificates.

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