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Rating Action:

Moody's downgrades subordinate classes of notes issued by two Nelnet Student Loan Trusts

28 Aug 2012

Approximately $76 million of asset-backed securities affected.

New York, August 28, 2012 -- Moody's Investors Service downgraded two subordinate classes of notes issued by Nelnet Student Loan Trust 2008-1 and Nelnet Student Loan Trust 2008-4. The downgrades conclude Moody's review of the notes initiated in April 2012 following the implementation of "Moody's Approach to Rating Securities Backed by FFELP Student Loans" methodology. The underlying collateral consists of a pool of Federal Family Education Loan Program (FFELP) student loans that are guaranteed by the Department of Education for a minimum of 97% of defaulted principal and accrued interest.

RATINGS RATIONALE

The ratings were downgraded as a result of the increased expected defaults we observed in the FFELP loan pools during the recent years. Our updated cash flow assumptions used in rating FFELP securitizations reflect this trend. The collateral loan pools in these transactions consist primarily of unseasoned Stafford and Plus loans. Although the total parity, i.e. the ratio of total assets to total liabilities, for both transactions was at the targeted release level as of the latest reporting date, the amount of available credit support is not sufficient to offset the higher net losses on the underlying collateral. Our cash flow analysis indicates that both transactions are in the negative carry position in the cash flow scenarios we use in rating highly rated tranches in FFELP securitizations.

The principal methodology used in these ratings was "Moody's Approach to Rating Securities Backed by FFELP Student Loans", published in April , 2012. Please see the Credit Policy page on www.moodys.comfor a copy of this methodology.

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside the given range may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated when the related securities ratings were issued. Even so, a deviation from the expected range will not necessarily result in a rating action nor does performance within expectations preclude such actions. The decision to take (or not take) a rating action is dependent on an assessment of a range of factors including, but not exclusively, the performance metrics.

The ratings on the subordinate bonds would be upgraded if spread between LIBOR index on the liability side and the one-month LIBOR index on the asset side is 10 bps lower, or downgraded if the spread is 10 bps higher.

To assess rating implications of the higher expected losses, each individual transaction was run through a variety of stress scenarios using the Structured Finance Workstation® (SFW), a cash flow model developed by Moody's Wall Street Analytics.

The complete rating actions are as follows:

Issuer: Nelnet Student Loan Trust 2008-1

Cl. B, Downgraded to Baa3 (sf); previously on Apr 2., 2012 A2 (sf) Placed Under Review for Possible Downgrade

Issuer: Nelnet Student Loan Trust 2008-4

Cl. B, Downgraded to Ba1 (sf); previously on Apr 2., 2012 A3 (sf) Placed Under Review for Possible Downgrade

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare each of the ratings are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information and confidential and proprietary Moody's Analytics information.

Moody's did not receive or take into account a third party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of these transactions in the past six months.

Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes of issuing these ratings.

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Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

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Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

JingJing Dang
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Irina Faynzilberg
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's downgrades subordinate classes of notes issued by two Nelnet Student Loan Trusts
No Related Data.
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