DBRS Morningstar Assigns Provisional Ratings to College Ave Student Loans 2021-A, LLC

DBRS, Inc. (DBRS Morningstar) assigned provisional ratings to the following classes of notes (collectively, the Notes) to be issued by College Ave Student Loans 2021-A, LLC (College Ave 2021-A):

-- $99,410,000 Class A-1 Notes at AAA (sf)*
-- $172,430,000 Class A-2 Notes at AAA (sf)*
-- $47,430,000 Class B Notes at AA (sf)
-- $41,640,000 Class C Notes at A (sf)
-- $24,670,000 Class D Notes at BBB (sf)

*The Class A-1 Notes and the Class A-2 Notes (together, the Class A Notes) will be issued in the aggregate principal amount equal to $271,840,000 allocated between the Class A-1 Notes and the Class A-2 Notes as determined on or before the date of pricing and may result in only one of such classes being issued. The Issuer anticipates that the maximum principal amount, if any, of Class A-1 Notes that will be issued will not exceed $99,410,000. The interest rate for the Class A Notes will be equal to either a fixed rate or a combination of a fixed rate and a variable rate.

The provisional ratings are based on a review by DBRS Morningstar of the following analytical considerations:

-- The transaction’s assumptions consider DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the Coronavirus Disease (COVID-19), available in its commentary “Global Macroeconomic Scenarios: December Update,” published on January 28, 2021. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020, which have been regularly updated. The scenarios were last updated on January 28, 2021, and are reflected in DBRS Morningstar’s rating analysis.
-- The assumptions consider the moderate macroeconomic scenario outlined in the commentary, with the moderate scenario serving as the primary anchor for current ratings. The moderate scenario factors in increasing success in containment during the first half of 2021, enabling the continued relaxation of restrictions.
-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- Transaction cash flows are sufficient to repay investors under all AAA (sf), AA (sf), A (sf), and BBB (sf) stress scenarios in accordance with the terms of the College Ave 2021-A transaction documents.
-- The quality and credit characteristics of the student loan borrowers.
-- Structural features of the transaction that require the Notes to enter into full turbo principal amortization if certain minimum parity levels are not maintained.
-- The experience, underwriting, and origination capabilities of College Ave Student Loans, LLC.
-- The ability of the Servicer, University Accounting Service, LLC, to perform collections on the collateral pool and other required activities.
-- The benefits offered by the existence of a Backup Servicer, the Pennsylvania Higher Education Assistance Agency.
-- The legal structure and expected presence of legal opinions that will address the true sale of the student loans, the nonconsolidation of the trust and that the trust has a valid first-priority security interest in the assets and the consistency with the DBRS Morningstar “Legal Criteria for U.S. Structured Finance.”

College Ave 2021-A will use a traditional pass-through structure with credit enhancement consisting of a reserve account, a capitalized interest account, subordination provided by the Class B Notes, Class C Notes and Class D Notes for the benefit of the Class A-1 Notes and Class A-2 Notes, subordination provided by the Class C Notes and Class D Notes for the benefit of the Class B Notes, subordination provided by the Class D Notes for the benefit of the Class C Notes, and excess spread. Principal payments to the Notes, once required overcollateralization targets are met, will be paid on a pro rata basis. The Notes will be primarily secured by a single pool of loans that includes both variable-rate loans and fixed-rate loans.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in U.S dollars unless otherwise noted.

The principal methodology is Rating U.S. Private Student Loan Securitizations (November 20, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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