DBRS Morningstar Assigns Provisional Ratings to Navient Student Loan Trust 2021-3

DBRS, Inc. (DBRS Morningstar) assigned provisional ratings to the following classes of notes to be issued by Navient Student Loan Trust 2021-3 (Navient 2021-3):

-- Up to $613,300,000 Class A-1A Notes rated AAA (sf)*
-- Up to $828,600,000 Class A-1B Notes rated AAA (sf)*
-- $13,900,000 Class B Notes rated AAA (sf)

*The allocation of the aggregate initial principal balance of the Class A Notes will be determined on or before the date of pricing. The initial principal balance of the Class A-1A Notes will be an amount not less than $136,000,000 and not more than $613,300,000. The initial principal balance of the Class A-1B Notes will be an amount up to $828,600,000.

The provisional ratings are based on DBRS Morningstar’s review of the following analytical considerations:

-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios For Rated Sovereigns,” published on September 8, 2021. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020. The baseline macroeconomic scenarios reflect DBRS Morningstar’s view that, although COVID-19 remains a risk to the outlook, uncertainty around the macroeconomic effects of the pandemic has gradually receded. Current median forecasts considered in the baseline macroeconomic scenarios incorporate some risks associated with further outbreaks, but remain fairly positive on recovery prospects given expectations of continued fiscal and monetary policy support. The policy response to COVID-19 may nonetheless bring other risks to the forefront in the coming months and years.
-- The transaction’s form and sufficiency of available credit enhancement.
-- The ability of the servicer to perform collections on the collateral pool and other required activities.
-- The provisions in the transaction documents include the transition to a new benchmark replacement rate upon the discontinuation of LIBOR.
-- The legal structure and expected legal opinions that will address the true sale of the student loans, the nonconsolidation of the trust, that the trust has a valid first-priority security interest in the assets, and the consistency with the DBRS Morningstar “Legal Criteria for U.S. Structured Finance” methodology.

The collateral securing Navient 2021-3 primarily consists of student loans originated pursuant to the Federal Family Education Loan Program, which are ultimately guaranteed by the U.S. Department of Education for at least 97% of principal plus accrued interest. Navient Solutions, LLC will act as the servicer for 100% of the trust student loans.

The Class A-1A Notes will pay a fixed interest rate. The Class A-1B Notes and the Class B Notes will bear interest based on one-month LIBOR plus a margin that will be determined at pricing. Interest will be paid on a monthly basis beginning on the distribution date in December 2021. Principal will be paid sequentially, first pro rata to the Class A-1A Notes and the Class A-1B Notes, and then the Class B Notes (in that order) until each such class of notes is paid in full.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at: https:// www.dbrsmorningstar.com/research/373262.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Federal Family Education Loan Program Securitizations (February 19, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrsmorningstar.com.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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