Fitch Upgrades SLM Student Loan Trust 2006-1 & 2006-3 Subordinate Notes; Affirms Senior Notes

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings has upgraded the subordinate notes issued by SLM Student Loan Trust 2006-2 and 2006-3 to 'AA-sf' from 'A+sf' and revised the Rating Outlook to Stable from Positive. At the same time, Fitch has affirmed the senior notes issued by SLM Student Loan Trust 2006-2 and 2006-3 at 'AAAsf', and the Rating Outlook remains Negative.

Fitch used its 'Global Structured Finance Rating Criteria,' 'U.S. FFELP Student Loan ABS Rating Criteria', and 'Rating U.S. Federal Family Education Loan Program Student Loan ABS' to review the ratings.

The upgrade to the subordinate notes for each trust is based on the increase in total parity and positive performance trends. Each transaction is structured to exclude the reserve account from the parity calculation once the pool factor falls below 40%. However, Fitch gives credit to the funds in the reserve account when conducting our analysis. The current pool factor for the 2006-1 trust is 20.3% and the balance in the reserve account is at the floor of $2,502,266. The current pool factor for the 2006-3 trust is 21.5% and the balance in the reserve account is at the floor of $2,502,119. As the notes pay down and each reserve account is at its respective floor level, the total parity calculated for use in Fitch's analysis will continue to increase. Total parity including the reserve account for series 2006-1 and 2006-3 is currently at 100.49% and 100.47%, respectively, as of the October 2012 quarterly servicer report.

The affirmation of the senior notes is based on the sufficient level of enhancement any combination of overcollateralization, subordination, and projected minimum excess spread to cover the applicable risk factor stresses.

Fitch has taken the following rating actions:

SLM Student Loan Trust 2006-1:

--Class A-4 affirmed at 'AAAsf'; Outlook Negative;

--Class A-5 affirmed at 'AAAsf'; Outlook Negative;

--Class B upgraded to 'AA-sf' from 'A+sf'; Outlook revised to Stable from Positive.

SLM Student Loan Trust 2006-3:

--Class A-4 affirmed at 'AAAsf'; Outlook Negative;

--Class A-5 affirmed at 'AAAsf'; Outlook Negative;

--Class B upgraded to 'AA-sf' from 'A+sf'; Outlook revised to Stable from Positive.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (June 6, 2012);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS' (April 3, 2012).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=675202

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