Fitch Ratings has affirmed the class A-6 notes and upgraded the class B notes of Wachovia Student Loan Trust (Wachovia) 2006-1.

RATING ACTIONS

Entity / Debt

Rating

Prior

Wachovia Student Loan Trust 2006-1

A-6 92978JAF0

LT

AAAsf

Affirmed

AAAsf

B 92978JAH6

LT

AAsf

Upgrade

Asf

Page

of 1

VIEW ADDITIONAL RATING DETAILS

The affirmation of the class A-6 notes reflects their stable performance and increasing parity level, which can sustain Fitch's 'AAAsf' credit and maturity stresses. The Outlook remains Stable.

The class B notes have been upgraded to 'AAsf' from 'Asf'. The upgrade reflects high and increasing total parity available to the bonds (at 101.07%, as of last reporting date, including the $2.3 million cash reserve) that can withstand Fitch's 'AAsf' credit stresses and meets Fitch's minimum parity expectation for 'AAsf' ratings of 101.00%, in accordance with Fitch's FFELP criteria. The notes' maturity risk is also commensurate to 'AAsf' ratings. The assigned Rating Outlook is Stable.

For this transaction, Fitch modelled transaction-specific servicing fees instead of Fitch's criteria-defined assumption of $3.25 per borrower, per month due to the higher contractual servicing fees for this transaction.

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 'AAA'/Stable

Collateral Performance: Based on transaction-specific performance to date, Fitch assumes a cumulative default rate of 13.75% under the base case scenario and a default rate of 41.25% under the 'AAA' credit stress scenario. After applying the default timing curve per criteria, the effective default rate is unchanged from the cumulative default rate. Fitch is maintaining the sustainable constant default rate (sCDR) of 2.50% and the sustainable constant prepayment rate (sCPR; voluntary and involuntary prepayments) of 9.00% in cash flow modelling.

Fitch applies the standard default timing curve in its credit stress cash flow analysis. The claim reject rate is assumed to be 0.25% in the base case and 2.00% in the 'AAA' case. The TTM levels of deferment, forbearance and income-based repayment (IBR; prior to adjustment) are 2.78% (2.80% at December 31, 2021), 4.75% (6.57%) and 21.94% (19.37%). These assumptions and are used as the starting point in cash flow modelling, and subsequent declines or increases are modelled as per criteria.

The 31-60 DPD and the 91-120 DPD have declined from one year ago and are currently 2.09% for 31 DPD and 0.60% for 91 DPD compared to 3.99% and 0.64% at Dec. 31, 2021 for 31 DPD and 91 DPD, respectively. The borrower benefit is approximately 0.31%, based on information provided by the sponsor. Fitch views notes with legal final maturities beyond 2035 to pose low maturity risk, since nearly all of the income-based repayment loans are expected to be forgiven between 2036 and 2041. All notes have legal final maturities dates beyond 2035.

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 December 2022, 100% of the trust student loans are indexed to one-month LIBOR. All notes are indexed to three-month LIBOR. Fitch applies its standard basis and interest rate stresses to this transaction as per criteria.

Payment Structure: Credit enhancement (CE) is provided by overcollateralization, excess spread, and for the class A notes, subordination provided by the class B notes. As of December 2022, collection period, Fitch's senior and total parity are 105.74% (5.42% CE) and 101.07% (1.06% CE) respectively. Liquidity support is provided by a reserve sized at 0.25% of the pool balance (with a floor of $2,366,836.00), currently equal to $2,366,836.00. The transaction will continue to release cash as long as the total parity level (not including the reserve after 40% pool factor) of 100.00% is maintained.

Operational Capabilities: Day-to-day servicing is provided by Nelnet Inc., (Nelnet) and PHEAA. Fitch believes Nelnet and PHEAA to be adequate servicers, due to their extensive track records of servicing FFELP loans.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

'AAAsf' 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 transaction faces 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. It should not be used as an indicator of possible future performance.

Current Ratings: class A-6 'AAAsf'; class B 'Asf'

Current Model-Implied Ratings: class A-6 'AAAsf' (Credit and Maturity Stress); class B 'AAAsf' (Credit and Maturity Stress)

Credit Stress Rating Sensitivity

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

Default increase 50%: class A 'AAAsf'; class B 'AAsf';

Basis spread increase 0.25%: class A 'AAAsf'; class B 'Asf';

Basis spread increase 0.50%: class A 'AAAsf'; class B 'Asf'.

Maturity Stress Rating Sensitivity

CPR decrease 25%: class A 'AAAsf'; class B 'AAAsf';

CPR decrease 50%: class A 'AAAsf'; class B 'AAAsf';

IBR usage increase 25%: class A 'AAAsf'; class B 'AAAsf';

IBR usage increase 50%: class A 'AAAsf; class B 'AAAsf';

Remaining Term increase 25%: class A 'AAAsf'; class B 'AAAsf';

Remaining Term increase 50%: class A 'AAsf'; class B 'Asf'.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

No upgrade credit or maturity stress sensitivity is provided for the class A-6 notes, as they are at their highest possible current and model-implied ratings.

Credit Stress Sensitivity

Default decrease 25%: class B 'AAAsf';

Basis Spread decrease 0.25%: class B 'AAAsf'.

Maturity Stress Sensitivity

CPR increase 25%: class B 'AAAsf';

IBR usage decrease 25%: class B 'AAAsf';

Remaining Term decrease 25%: class B 'AAAsf'.

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

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This 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. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.

Additional information is available on www.fitchratings.com

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