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Rating Action:

MOODY'S RATES PHEAA STUDENT LOAN DEAL Aaa and A2

21 Apr 2005
MOODY'S RATES PHEAA STUDENT LOAN DEAL Aaa and A2

$400 Million of Asset Backed Securities Rated.

New York, April 21, 2005 -- Moody's Investors Service assigned long term public ratings of Aaa to the Series 2005-1 Class A-1, Series 2005-1 Class A-2 senior notes and long term ratings of A2 to the Series 2005-1 Class B-1 subordinate notes issued by PHEAA Student Loan Trust I.

The complete rating actions are as follows:

$273,000,000 Series 2005-1 Class A-1 Floating Rate Student Loan-Backed Notes, rated Aaa

$107,000,000 Series 2005-1 Class A-2 Floating Rate Student Loan-Backed Notes, rated Aaa

$20,000,000 Series 2005-1 Class B-1 Auction Rate Student Loan-Backed Notes, rated A2

The $400 million issuance will be the third transaction issued under an indenture of trust dated as of December 1, 2003 and a third supplemental indenture of trust, dated as of April 1, 2005. The proceeds from the sale of the notes will be used to purchase student loans, replenish the reserve fund, and pay the costs of issuing the notes.

RATING RATIONALE

Moody's said that the ratings are primarily based on: (1) the 98% federal guarantee from the U.S. Department of Education (DOE) on any defaulted Federal Family Education Loan Program (FFELP) student loans underlying the transaction; (2) the potential for excess spread accumulation within the trust estate over the life of the transaction with excess spread eligible for release when total parity is over 101.5% and senior parity over 105%; (3) the existence of a reserve fund sized at 0.95% of all outstanding bonds, with a minimum floor of $500,000; and (4) the experience and expertise of Pennsylvania Higher Education Assistance Agency as servicer. The Aaa ratings of the senior notes are also based on the 5.3% subordination provided by the Series 2003-1 Class B-1, Series 2004-1 Class B-1 and Series 2005-1 Class B-1 notes.

COLLATERAL

The pool of student loans supporting the notes consists of FFELP student loans with a balance of approximately $1.08 billion. The average outstanding principal balance per borrower is approximately $14,800, the weighted average annual borrower interest rate as of the statistical cut-off date (January 31, 2005) is 4.42%, and the weighted average remaining term is 198 months. The school type concentration is comprised of approximately 88% of loans made to borrowers attending four-year schools, approximately 3% of loans made to borrowers attending two-year schools, approximately 7% of loans made to borrowers attending proprietary/vocational schools and approximately 2% of loans made to borrowers attending unknown types of schools. Historically, loans made to borrowers attending four-year schools have had lower default rates than loans made to students attending two-year and proprietary schools. The loans are well seasoned with approximately 83% of the pool in active repayment.

RELEVANT TRANSACTION PARTIES

The issuer is PHEAA Student Loan Trust I. The depositor is PHEAA Student Loan Foundation, Inc. Pennsylvania Higher Education Assistance Agency serves as the administrator and the servicer. Manufacturers and Traders Trust Company serves as the eligible lender trustee and the indenture trustee.

New York
Linda Stesney
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Zheng Sun
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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