Fitch Rates Kentucky Higher Education Student Loan Corp. FFELP Servicer 'Proficient Plus'

Business Wire, August 6, 2007

NEW YORK -- Fitch Ratings assigns a 'Proficient Plus' rating to Kentucky Higher Education Student Loan Corporation (KHESLC) for FFELP loan servicing. In addition, Fitch assigns a 'Proficient Plus' rating for private student loan servicing. The FFELP rating is based on their ability to exceed Department of Education (ED) guidelines for servicing FFELP loans. The private education loan rating is based on their assertive collection efforts that closely resemble servicing strategies used for other consumer loan collections.

KHESLC was established in 1978 as a de jure municipal corporation and now maintains a 75% market share of Kentucky FFELP student loans. They service from their headquarters in Louisville, Kentucky with some shared services from Kentucky Higher Education Assistance Authority in Frankfort, Kentucky. They have been servicing FFELP loans for 29 years (on a third party basis for 11 years) and private student loans for six years on a third party basis only. As of December 31, 2006, KHESLC serviced about 276,000 accounts with an unpaid principal balance of approximately $7.9 billion. About 34% of their servicing portfolio is private education loans with the remaining 66% FFELP loans (based on unpaid principal balance).

KHESLC's default aversion process for FFELP exceeds the demands required by ED and the collection process for private education loans is assertive and resembles servicing processes of other consumer loans. The claims process is efficient predominantly using the common claim form as well as e-filing at times.

KHESLC uses the Student Loan Servicing System (SLSS), which was developed by Idaho Financial Associates (IFA), and is owned by NelNet. Their disaster recovery and business continuity plans are comprehensive and when last tested was deemed 100% successful.

Fitch rates ABS seller/servicers as Proficient Plus, Proficient or Proficiency Unproven. For further information about Fitch Student Loan ABS seller/servicer ratings, refer to the report titled 'Rating U.S. Student Loan Seller/Servicers,' dated Aug. 1, 2007, available on the Fitch Ratings web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.