OREANDA-NEWS. February 09, 2015. Fitch Ratings affirms the 'AAAsf' rating on the senior notes and the 'A+' rating on the subordinate notes issued by Iowa Student Loan Liquidity Corporation (Iowa Student Loan) student loan asset-backed notes, series 2005-1. The Rating Outlook remains Stable for the senior and subordinate notes. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

High Collateral Quality:
The collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch currently rates the U.S. sovereign 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement (CE):
While both the senior and subordinate notes will benefit from overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread, the senior notes also benefit from subordination provided by the class B note. As of September 2014, total parity is 101.77% (1.74% CE) and senior parity is 118.63% (15.70% CE). Although total parity is 101.77%, Fitch only gives credit to the 100.50% cash release level.

Adequate Liquidity Support:
Liquidity support is provided by a debt service reserve fund sized at the greater of 0.50% of the outstanding pool balance and \\$1,014,938.

Acceptable Servicing Capabilities:
As of Jan. 1, 2014, servicing for the Iowa Student Loan Liquidity Corporation (ISL) 2005-1 trust was transferred to ISL's subsidiary, Aspire Resources, Inc. Fitch believes Aspire Resources, Inc. is an acceptable servicer of FFELP student loans.

RATING SENSITIVITIES

Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has affirmed the following ratings:

Iowa Student Loan Liquidity Corporation 2005-1
--Senior class A-2 notes at 'AAAsf'; Outlook Stable;
--Senior class A-3 notes at 'AAAsf'; Outlook Stable;
--Subordinate class B notes at 'A+sf'; Outlook Stable.