Morningstar DBRS Finalizes Provisional Credit Ratings on College Ave Student Loans 2024-A, LLC

DBRS, Inc. (Morningstar DBRS) finalized its provisional credit ratings on the following classes of notes (collectively, the Notes) issued by College Ave Student Loans 2024-A, LLC (College Ave 2024-A):

-- $235,708,000 Class A-1A Notes at AAA (sf)
-- $58,927,000 Class A-1B Notes at AAA (sf)
-- $36,435,000 Class B Notes at AA (sf)
-- $12,500,000 Class C Notes at A (sf)
-- $18,000,000 Class D Notes at BBB (sf)

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

-- The transaction assumptions consider Morningstar DBRS’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios for Rated Sovereigns: March 2024 Update", published on March 27, 2024. These baseline macroeconomic scenarios replace Morningstar DBRS’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.
-- 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 2024-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 legal structure and presence of legal opinions that 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 Morningstar DBRS’ “Legal Criteria for U.S. Structured Finance” methodology.

College Ave 2024-A uses 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-1A Notes and Class A-1B Notes (together, the Class A 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. The Notes are primarily secured by a pool of loans that includes both variable-rate loans and fixed-rate loans.

Morningstar DBRS’ credit ratings on the securities referenced herein address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for the rated Notes are the Class A Interest Distribution Amount, Class B Interest Distribution Amount, Class C Interest Distribution Amount, Class D Interest Distribution Amount, and the related Note Balance.

Morningstar DBRS’ credit ratings do not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction documents that are not financial obligations. The associated contractual payment obligation that is not a financial obligation is related to interest on any unpaid Class A Interest Distribution Amount, Class B Interest Distribution Amount, Class C Interest Distribution Amount, and the Class D Interest Distribution Amount.

Morningstar DBRS’ long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance (ESG) factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://dbrs.morningstar.com/research/427030 (January 23, 2024).

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

The principal methodology applicable to the credit rating is Rating U.S. Private Student Loan Securitizations (October 25, 2023; https://dbrs.morningstar.com/research/422385).

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

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

DBRS, Inc.
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New York, NY 10005 USA
Tel. +1 212 806-3277

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

Rating U.S. Structured Finance Transactions (February 22, 2024)
https://dbrs.morningstar.com/research/428503

Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024)
https://dbrs.morningstar.com/research/428623

Operational Risk Assessment for U.S. ABS Originators (March 21, 2024)
https://dbrs.morningstar.com/research/430004

Operational Risk Assessment for U.S. ABS Servicers (March 21, 2024)
https://dbrs.morningstar.com/research/430003

Legal Criteria for U.S. Structured Finance (December 7, 2023)
https://dbrs.morningstar.com/research/425081

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.