Navient Credit Finance Corporation, Blue Ridge Funding and VL Funding are providing collateral for a new student loan securitization totaling $263 million, according to a pre-sale from Fitch Ratings.

Navient Student Loan Trust 2014-2 consists of a $256 million A tranche and a $7 million B tranche.

Fitch rated the A piece a preliminary ‘AAAsf’ and the B tranche ‘AAsf.’

The collateral consists of loans that are guaranteed by the U.S. under the Federal Family Education Loan Program (FFELP). Some 15% of the pool is made up of rehabilitated loans, which are those that have defaulted and been restructured under the terms of the Higher Education Act of 1965. 

Fitch’s base case scenario for default is a rate of between 15.75% and 16.25% for the non-rehab loans and 60% for the rehab loans.

While FFELP collateral does have government backing, the Education Department does not reimburse 100% of net losses.

The target overcollateralization for the bonds is above 4.5% of the adjusted pool balance, while a reserve account is sized at 2.25% of the initial student loan balance.

The master servicer on the deal is Navient Solutions.

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