DBRS Downgrades the Ratings on 25 Series of Notes Issued by NextStudent Master Trust I and Places Them Under Review with Negative Implications

DBRS today downgraded its ratings on 25 series of notes issued by NextStudent Master Trust I and placed them Under Review with Negative implications. Below is a list of the series affected:

--Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-1, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-2, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-3, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-4, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-5, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-6, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-7, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-8, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-9, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-10, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-11, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-12, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-13, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-14, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007A-15, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2007-1, Series 2007B-1, Downgraded to CCC from ‘A’ and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-1, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-2, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-3, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-4, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-5, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-6, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-7, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006A-8, Downgraded to BBB from AAA and put Under Review – Negative

-- Auction Rate Student Loan-Backed Notes, Series 2006-1, Series 2006B-1, Downgraded to CCC from ‘A’ and put Under Review – Negative

The Indenture Trustee has been directed by the Directing Holders (a majority of the senior and subordinate bondholders) to declare an acceleration of the trust, liquidate the collateral and redeem the outstanding notes. To accomplish this, a liquidation agent has been hired and is in the process of organizing the auction. A minimum collateral sale price of 93% of the outstanding principal balance of all outstanding senior notes (plus accrued interest and estimated expenses associated with the liquidation plus any other fees and expenses incurred over the remaining life of the trust) has been set. The bids are due on July 21, 2010 and the liquidation is expected to occur soon thereafter.

The downgrades of the 25 classes of notes outstanding under this master trust relate to the acceleration and liquidation of the trust collateral following certain un-remedied Events of Default under the applicable Trust Indenture. The downgrade of the senior and subordinated notes takes into account the potential recoveries anticipated for each class under the terms of the auction.

Due to the nature of the collateral, a sale price at or near market rates would normally be anticipated, however, the circumstances and the auction process itself may add variability to the final outcome. As a result, each series has been placed Under Review with Negative Implications to indicate the potential for further negative rating actions depending on the variability of outcomes introduced under the auction process.

DBRS will release the results of further rating actions when results of the auction process are finalized.

Notes:
This is a Structured Finance rating.

The applicable methodology is DBRS Master U.S. ABS Surveillance Methodology, dated January 29, 2010, which can be found on www.dbrs.com under Methodologies.