Fitch Rates Education Loans Incorporated $189.9MM Issuance

Business Wire, Sept 20, 2002

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 20, 2002

Fitch Ratings assigns ratings to the following student loan asset-backed notes issued by Education Loans Incorporated (EdLinc):

Ratings for new issuance:

--$82,700,000 student loan asset-backed notes, senior series 2002-1A 'AAA';

--$82,700,000 student loan asset-backed notes, senior series 2002-1B 'AAA';

--$24,500,000 student loan asset-backed notes, subordinate series 2002-1C 'A'.

Ratings for existing debt:

--$79,000,000 student loan asset-backed notes, senior series 2001-1A 'AAA';

--$79,000,000 student loan asset-backed notes, senior series 2001-1B 'AAA';

--$23,800,000 student loan asset-backed notes, subordinate series 2001-1C 'A'

--$54,100,000 student loan asset-backed notes, senior series 2000-1A 'AAA';

--$54,100,000 student loan asset-backed notes, senior series 2000-1B 'AAA';

--$22,000,000 student loan asset-backed notes, subordinate series 2000-1C 'A';

--$78,000,000 student loan asset-backed notes, senior series 1999-1A 'AAA';

--$39,000,000 student loan asset-backed notes, senior series 1999-1B 'AAA';

--$9,300,000 student loan asset-backed notes, subordinate series 1999-1C 'A'.

The ratings are based on the quality of the student loan portfolio; the reserve fund, sized at 1.5% of the principal amount of the notes outstanding, with a $500,000 minimum; the ability of the transaction to pass stressful cash flow tests at each rating level; and the sound legal structure. The collateral consists of Federal Family Education Loan Program (FFELP) student loans and self-insured, credit tested, private student loans sponsored by Student Loan Finance Corp. (SLFC). In addition, the ratings on the senior notes are based on the 12.7% subordination level provided by the subordinate notes.

The ratings address the ability of the trust to redeem the notes at maturity and pay timely interest. The ratings do not address any carryover amounts that may accrue on the notes 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 2002-1 notes are issued under the fourth supplemental indenture dated as of Sept. 1, 2002 to the trust indenture dated as of Dec. 1, 1999. Of the series 2002-1 note proceeds, $138 million will be used to acquire or originate eligible loans at closing; $46 million will be used to purchase or originate student loans during the acquisition period through Jan. 16, 2003; approximately $2.8 million was deposited in the reserve fund; and approximately $3.1 million was used to pay issuance costs. After issuance, 100% of the debt held within the trust will be taxable, with interest based on the 28-day auction rate.

The series 2002-1 notes are 28-day auction-rate securities. Interest is payable on the first business day following the end of each interest period. The legal final maturity dates for the series 2002-1 notes is Dec. 1, 2035.

The collateral securing the notes consists of FFELP and private student loans, 76.2% and 23.8% of the initial portfolio, respectively. The FFELP loans are guaranteed 98% or 100% by an eligible guarantor and re-insured by the U.S. Department of Education (ED) depending on their origination date.

For the private student loans, Student Loan Finance Corporation (SLFC) is responsible for the application and origination process, including loan underwriting and disbursement. The private loans financed within the trust include the Great Opportunities Academic Loan and Great Opportunities Academic Loan II Programs offered by U.S. Bank National Association; the Choice Loan, Pathway, Partner and MEFC Loan Programs offered by Marquette Bank, N.A.; and the Quest Loan, Independence, Bremer Education and BrainBucks Loan Programs offered by Surety Loan Funding Company (a wholly owned subsidiary of SLFC). There are two private loan underwriting standards: Credit Ready (borrowers meet minimum credit standards) or Credit Worthy (borrowers meet higher credit standards on their own or with a co-signer). The private loans included in the trust are primarily from students attending 4-year institutions. These loans are considered defaulted after being delinquent for 180 days and are reimbursed within the trust by the Alternative Loan Guarantee Fund and borrower recoveries. The Alternative Loan Guarantee Fund holds the guarantee fees paid by borrowers upon disbursement.

SLFC is the servicer for both the FFELP and private student loans, with AFSA and Great Lakes Higher Education Servicing Corporation acting as sub-servicers for a portion of the FFELP loans.

The lead underwriter on this transaction is Salomon Smith Barney.

EdLinc is a taxable, bankruptcy-remote subsidiary of SLFC governed under the laws of Delaware. SLFC is a South Dakota corporation organized in 1997 and is the servicer for student loans held by its subsidiaries, EdLinc and GOAL Funding.