OREANDA-NEWS. Fitch Ratings has taken the following rating actions on Nelnet Student Loan Trust 2007-1:

--Class A-2 affirmed at 'AAAsf'; Outlook Stable;
--Class A-3 at 'AAAsf'; Rating Watch Negative maintained;
--Class A-4 at 'AAAsf'; Rating Watch Negative maintained;
--Class B-1 at 'AAsf'; Rating Watch Negative maintained.
--Class B-2 at 'AAsf'; Rating Watch Negative maintained.

KEY RATING DRIVERS

Maturity Risk: The Rating Watch Negative action is based on the heightened risk of the Nelnet 2007-1 class A-3, A-4, B-1 and B-2 notes missing their respective legal final maturity dates of May 27, 2025, Aug. 27, 2036, Aug. 25, 2037, and Aug. 25, 2037, , which would result in an event of default. In an event of such technical default, Fitch would expect ultimate repayment of full principal and interest after the legal final. Fitch expects to resolve the Rating Watch Negative status once its revised FFELP criteria report is published. The magnitude of any potential rating action could vary depending on remaining time to maturity, recent payment trends, issuer actions such as loan purchases, or other external factors.

High Collateral Quality: The trust 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. The current U.S. sovereign rating is 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread, and for the senior notes, subordination of the class B notes. As of January 2016, total parity is 100.06% (0.06% CE) and senior parity is 104.87% (4.64% CE). The trust has been releasing cash.

Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Fund currently sized at the greater of 0.25% of the pool balance and $3,623,145.56, currently equal to the floor.

Acceptable Servicing Capabilities: National Education Loan Network, as master servicer, and Nelnet Inc, as subservicer, are responsible for day-to-day servicing of the trust. Fitch believes both National Education Loan Network and Nelnet Inc. to be acceptable servicers of FFELP student loans.

On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014. Fitch has reviewed this transaction under both the existing and proposed criteria.

RATING SENSITIVITIES
Since the FFELP student loan ABS relies 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, basis risk, and loan extension risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults, basis shock beyond Fitch's published stresses, lower than expected payment speed, and other factors could result in future downgrades. Likewise, a buildup of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.