DBRS Morningstar Finalizes Provisional Ratings on Nelnet Student Loan Trust 2023-PL1

DBRS, Inc. (DBRS Morningstar) finalized its provisional ratings on the following classes of notes issued by Nelnet Student Loan Trust 2023-PL1:

-- $65,900,000 Class A1-A Notes at AAA (sf)
-- $65,900,000 Class A1-B Notes at AAA (sf)
-- $43,760,000 Class B Notes at BBB (sf)

CREDIT RATING RATIONALE/DESCRIPTION
The ratings are based on DBRS Morningstar’s review of the following analytical considerations:
-- The transaction’s form and sufficiency of available credit enhancement.
-- OC, note subordination, the reserve account, and excess spread create credit enhancement levels that are commensurate with the ratings.
-- Transaction cash flows are sufficient to repay investors under all AAA (sf) and BBB (sf) stress scenarios in accordance with the terms of the Nelnet 2023-PL1 transaction documents.
-- The quality and credit characteristics of the student loan borrowers.
-- The abilities of the servicing entities to perform collections on the collateral pool and other required activities.
-- DBRS Morningstar has performed an operational review and considers Nelnet to be an acceptable servicer of private student loans.
-- The legal structure and legal opinions that 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.
-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary, “Baseline Macroeconomic Scenarios for Rated Sovereigns: September 2023 Update,” published on September 28, 2023. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.

DBRS Morningstar’s credit rating on the securities referenced herein addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for each of the rated notes are the current note interest amount, any note interest shortfall amount, and the note balance.

DBRS Morningstar’s credit rating does not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction documents that are not financial obligations. The associated contractual payment obligation that is not a financial obligation is the accrued interest on any note interest shortfall amount for each of the rated notes.

DBRS Morningstar’s long-term credit ratings provide opinions on risk of default. DBRS Morningstar considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The DBRS Morningstar short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

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 (July 4, 2023; https://www.dbrsmorningstar.com/research/416784/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings).

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

The principal methodology applicable to the credit rating is Rating U.S. Private Student Loan Securitizations
(October 25, 2023; https://www.dbrsmorningstar.com/research/422385/rating-us-private-student-loan-securitizations)

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

DBRS Morningstar had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

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

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 212 806-3277

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

Operational Risk Assessment for U.S. ABS Servicers (July 20, 2023)
https://www.dbrsmorningstar.com/research/417415/operational-risk-assessment-for-us-abs-servicers

Operational Risk Assessment for U.S. ABS Originators (July 20, 2023)
https://www.dbrsmorningstar.com/research/417416/operational-risk-assessment-for-us-abs-originators

Legal Criteria for U.S. Structured Finance (December 7, 2022)
https://www.dbrsmorningstar.com/research/407008/legal-criteria-for-us-structured-finance

Rating U.S. Structured Finance Transactions (October 30, 2023)
https://www.dbrsmorningstar.com/research/422592/rating-us-structured-finance-transactions

Interest Rate Stresses for U.S. Structured Finance Transactions (June 9, 2023)
https://www.dbrsmorningstar.com/research/415687/interest-rate-stresses-for-us-structured-finance-transactions

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