Fitch Rts Brazos Student Finance Corp Student Loan Asset-Bkd Nts

Business Wire, June 14, 2001

Business Editors

NEW YORK--(BUSINESS WIRE)--June 14, 2001

Fitch rates the following Student Loan Asset-Backed Notes issued by Brazos Student Finance Corp (Brazos):

Ratings for new issuance:

-- $64,000,000 student loan asset-backed notes, senior series 2001A-1 'AAA';

-- $29,000,000 student loan asset-backed notes, senior series 2001A-2 'AAA';

-- $50,000,000 student loan asset-backed notes, subordinate series 2001B-1 'A'.

Ratings affirmed for existing debt:

-- $72,746,221 student loan asset-backed notes, senior series

1998A-1 'AAA';

-- $269,500,000 student loan asset-backed notes, senior series

1998A-2 'AAA';

-- $62,500,000 student loan asset-backed notes, senior series

1998A-3 'AAA';

-- $50,000,000 student loan asset-backed notes, subordinate

series 1998B-1 'A'.

Fitch rates the senior series 2001A-1 and 2001A-2 notes 'AAA' and the subordinate series 2001B-1 notes 'A'. In addition, Fitch affirms the 'AAA' ratings on the senior series 1998A-1, 1998A-2, and 1998A-3 notes and the 'A' rating on the subordinate series 1998B-1 notes. The ratings are based on the quality of the student loan portfolio; the reserve fund; the ability of the transaction to pass stressful cash flow tests at each rating level; and the sound legal structure. The reserve fund is sized at the sum of 2% of the aggregate principal amount of the notes outstanding with a $1,000,000 minimum. In addition, the ratings on the senior series 2001A-1 and 2001A-2 notes are based on the 34.97% subordination provided by the subordinate series 2001B-1 notes and the ratings on the senior series 1998A-1, 1998A-2, and 1998A-3 notes are based on the 11% subordination provided by the subordinate series 1998B-1 notes. The ratings address the ability of the trust to redeem notes at maturity and pay accrued interest. The ratings do not address the ability of the trust to pay carry-over interest, nor do they address the ability of auction rate noteholders to successfully redeem their notes at an auction now or in the future.

The series 2001 notes are issued under the first supplement dated as of June 1, 2001, to the trust indenture dated April 1, 1998. The proceeds of the series 2001 notes will be used to fund the reserve fund, pay capitalized interest, pay maintenance and operating expenses, and acquire student loans.

The series 2001 notes are taxable, 28-day auction-rate securities with interest payable on the first business day following an auction period. Interest is calculated based on the actual days elapsed during a 360-day year (Actual/360). The legal final maturity date is July 1, 2036.

The collateral securing the notes consists of Federal Family Education Loan Program (FFELP) student loans, Health Education Assistance Loans (HEAL), The Education Resources Institute Inc (TERI) guaranteed student loans, TUITIONGard student loans and self-insured prepGATE and GATE Family student loans. The FFELP loans are guaranteed 100% or 98% by an eligible guarantor and re-insured by the U.S. Department of Education (ED) depending on their disbursement date. The HEAL loans are disbursed to graduate students enrolled in an approved health discipline and guaranteed 100% less litigation costs by the Secretary of Health and Human Services (HHS). The TERI loans are guaranteed 100% of principal and accrued interest. Fitch rates TERI's insurer financial strength 'A'. The TUITIONGard student loans are insured by Landmark American Insurance Company and American and Foreign Insurance Company, both part of the Royal & SunAlliance USA Insurance Group, for 100% of principal and accrued interest less a 5% deductible. Fitch rates the insurer financial strength of Royal & SunAlliance USA Insurance Group 'AA-'. The remainder of the collateral consists of self-insured, credit underwritten loans originated under two First Marblehead loan programs: GATE Family and prepGATE. GATE Family loans are made to students attending four-year universities or accredited professional schools and are co-signed by a creditworthy parent. prepGATE loans are made to creditworthy parents to fund their children's attendance at accredited K-12 institutions.

The issuer is Brazos Student Finance Corporation, a 501(c)(3) non-profit corporation organized in 1985 under the Texas Non-Profit Corporation Act. The Corporation is affiliated with Brazos Higher Education Service Corporation, and Brazos Higher Education Authority Inc. Fitch currently rates transactions by both Brazos Student Finance Corp. and Brazos Higher Education Authority Inc.

Brazos Higher Education Service Corporation Inc. is the Fitch- approved master servicer and will oversee the duties of the Fitch-approved subservicers. The subservicers for the FFELP portfolio are AFSA Data Corporation (AFSA), Pennsylvania Higher Education Assistance Agency (PHEAA), Sallie Mae Servicing Corporation, SunTech Inc., USA Group Loan Services, Inc. (USA Group), Great Lakes Higher Education Servicing Corporation (GLHESC) and Georgia Student Finance Authority (GSFA). PHEAA will also service the HEAL portfolio; USA Group and Education Finance Group (EFG Technologies) will service the TERI guaranteed student loan portfolio; and AFSA will service the TUITIONGard portfolio.