Fitch Ratings has affirmed the ratings assigned to College Loan Corporation Trust II 2007-1.

The Rating Outlooks are revised to Negative from Stable.

RATING ACTIONS

Entity / Debt

Rating

Prior

College Loan Corporation Trust II 2007-1

A-14 194267AQ3

LT

AA+sf

Affirmed

AA+sf

B-3 194267AN0

LT

BBBsf

Affirmed

BBBsf

Page

of 1

VIEW ADDITIONAL RATING DETAILS

Transaction Summary

The class A notes pass Fitch's credit and maturity stresses at their current rating level; however, the Rating Outlook has been revised to Negative from Stable due to the 'AA'/Interest Rate Down credit stress scenarios indicating a limited margin of safety on the principal repayment dates relative to the legal final maturity date.

For the class B notes the Negative Outlook is due to a limited margin of safety on the principal repayment expected under the credit stress as the notes experienced a principal shortfall for the 'BBB'/Interest Rate Down scenario. The rating of the class B notes is one category higher than the lowest model implied rating which is permitted by the FFELP criteria.

KEY RATING DRIVERS

U.S. Sovereign Risk: The trust collateral comprises Federal Family Education Loan Program (FFELP) loans with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The U.S. sovereign rating is currently 'AA+'/Outlook Stable.

Collateral Performance: Based on transaction specific performance to date, Fitch maintained its sustainable constant default rate assumption (sCDR) of 4.5% and the sustainable constant prepayment rate (sCPR) is 11.0%. The 'AAsf' and base case default rate is 67.4% and 24.5%. After applying the default timing curve per criteria, the 'AA' and base case effective default rate are unchanged. The TTM levels of deferment, forbearance, and income-based repayment (IBR prior to adjustment) are 4.2%, 7.5%, and 24.6%, respectively. These levels are used as the starting point in cash flow modeling and subsequent declines and increases are modeled as per criteria.

The claim reject rate is assumed to be 0.25% in the base case and 2.75% in the 'AA' case. The 31-60 days past due (DPD) increased to 2.77% from 2.23% one year prior, but 91-120 DPD improved to 1.01% from 1.53%. Borrower benefits are 0.07% based on information provided by the sponsor.

Basis and Interest Rate Risk: Basis risk for this transaction arises from any rate and reset frequency mismatch between interest rate indices for SAP and the securities. As of the most recent collection period, all of the trust student loans are indexed to 30-day Secured Overnight Financing Rate (SOFR) and the notes are reset rate and auction rate notes currently indexed to 30-day SOFR and 91-day T-bill rate, respectively. Fitch applies its standard basis and interest rate stresses to this transaction as per criteria.

Payment Structure: Credit enhancement (CE) is provided by overcollateralization (OC), excess spread, and for the class A notes, subordination of the class B notes. As of the most recent distribution date, the reported total and senior parity asset percentage was 99.05% was 104.26%. Liquidity support is provided by a reserve account maintained at the greater of 0.5% of the note balance and $2,000,000. The transaction is not releasing cash as reported total and senior parity ratios are below the 100.5% and 105% levels, respectively, needed for cash release, and the reported OC amount is not at least $2,000,000.

Operational Capabilities: Day-to-day servicing is provided by Nelnet Inc. Fitch considers Nelnet as an acceptable servicer, due to its extensive track record as one of the largest servicers of FFELP loans.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

'AA+sf' rated tranches of most FFELP securitizations will likely move in tandem with the U.S. sovereign rating given the strong linkage to the U.S. sovereign, by nature of the reinsurance provided by the Department of Education. 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.

This section provides insight into the model-implied sensitivities the transactions face when one assumption is modified, while holding others equal. Fitch conducts credit and maturity stress sensitivity analysis by increasing or decreasing key assumptions by 25% and 50% over the base case. The credit stress sensitivity is viewed by stressing both the base case default rate and the basis spread. The maturity stress sensitivity is viewed by stressing remaining term, IBR usage and prepayments. The results below should only be considered as one potential outcome, as the transaction is exposed to multiple dynamic risk factors and should not be used as an indicator of possible future performance.

Fitch has revised its global economic outlook forecasts as a result of the war in Ukraine and related economic sanctions. Downside risks have increased highlighted in the special report, 'What a Stagflation Scenario Would Mean for Global Structured Finance', an assessment of the potential rating and asset performance impact of a plausible, albeit worse than expected, adverse stagflation scenario. Fitch expects the FFELP student loan ABS sector, under this scenario, to experience mild to modest asset performance deterioration, indicating some Outlook changes (between 5% and 20% of outstanding ratings). Asset performance under this adverse scenario is expected to be more modest than the most severe sensitivity scenario below. The severity and duration of the macroeconomic disruption is uncertain, but is balanced by a strong labor market and the build-up of household savings during the pandemic, which will provide support in the near term to households faced with falling real incomes.

Credit Stress Rating Sensitivity

Default increase 25%: class A 'AAsf'; class B 'Bsf'

Default increase 50%: class A 'Asf'; class B 'Bsf'

Basis Spread increase 0.25%: class A 'AA+sf'; class B 'CCCsf'

Basis Spread increase 0.5%: class A 'AAsf'; class B 'CCCsf'

Maturity Stress Rating Sensitivity

CPR decrease 25%: class A 'AA+sf'; class B 'BBBsf'

CPR decrease 50%: class A 'AA+sf'; class B 'BBBsf'

IBR Usage increase 25%: class A 'AA+sf'; class B 'BBBsf'

IBR Usage increase 50%: class A 'AA+sf'; class B 'BBBsf'

Remaining Term increase 25%: class A 'AA+sf'; class B 'BBBsf'

Remaining Term increase 50%: class A 'AA+sf'; class B 'BBBsf'

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Class A is rated 'AA+sf' and is at its highest attainable rating. The results below are for class B.

Credit Stress Rating Sensitivity

Default decrease 25%: class B 'BBBsf'

Default decrease 50%: class B 'BBBsf'

Basis Spread decrease 0.25%: class B 'BBBsf'

Basis Spread decrease 0.50%: class B 'Asf'

Maturity Stress Rating Sensitivity

CPR increase 25%: class B 'AA+sf'

CPR increase 50%: class B 'AA+sf'

IBR Usage decrease 25%: class B 'Asf'

IBR Usage decrease 50%: class B 'BBBsf'

Remaining Term decrease 25%: class B 'BBBsf'

Remaining Term decrease 50%: class B 'BBBsf'

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

Additional information is available on www.fitchratings.com

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