Fitch Places 2 Student Loan ABS Classes from Brazos SFC 1998 Master Trust on Rating...

Fitch Places 2 Student Loan ABS Classes from Brazos SFC 1998 Master Trust on Rating Watch Negative

NEW YORK--(Business Wire)--
Fitch Ratings has placed the following two classes from Brazos
Student Finance Corporation (Brazos) 1998 Master Trust on Rating Watch
Negative:

Brazos Student Finance Corporation 1998 Master Trust

--Class 1998B-1 'A';

--Class 2001B-1 'A'.

The action follows Monday's bankruptcy filing by The Education
Resource Institute (TERI). The collateral supporting the trust
consists of both federally guaranteed loans originated under the
Federal Family Education Loan Program (FFELP) and private student
loans, the majority of which is guaranteed against default by TERI. As
of December 31, 2008, the trust contains 42.5% TERI guaranteed private
student loans, 25.8% FFELP loans, 16.4% self-insured private student
loans, 8.7% TuitionGard insured private student loans, and 6.6% Health
Education Assistance Loans (HEAL).

Fitch's concerns fall into two primary areas:

--Subordinate ratings where Fitch gave limited credit to TERI's
general reserves;

--Service levels related to collection and loss mitigation
functions, which if not maintained, could increase loss severity.

Classes rated at or below TERI's IFS rating at the time of the
transaction's close were afforded the benefit of TERI's general
reserves to pay for any defaults occurring on the portion of loans
financed in the trust that are guaranteed by TERI. As a result of
TERI's bankruptcy filing, Fitch is reviewing the transaction to
determine if, absent TERI's ability to pay claims from its general
reserves, current credit enhancement levels are sufficient to maintain
the current ratings on the class 1998B-1 and 2001B-1 notes.

With regards to service levels, Fitch is analyzing whether TERI's
bankruptcy filing will impact the quality of collection and loss
mitigation efforts for the collateral financed by the Brazos 1998
Master Trust. Currently, TERI manages collections for defaulted
collateral which is ultimately conducted by third party service
providers.

Fitch expects to complete its review of the Brazos 1998 Master
Trust within 90 days. During this period, Fitch will continue to
discuss the full impact of TERI's bankruptcy filing with Brazos and
TERI.

Brazos 1998 Master Trust Collateral and Servicing:

The Brazos 1998 Master Trust transaction consists of FFELP, HEAL,
third party guaranteed private student loans and self-insured private
student loans. Similar to the ED reimbursement for defaulted FFELP
loans, HEAL loans are eligible for at least 98% default reimbursement
by the Department of Health and Human Services (HHS).

The private student loans are intended to assist individuals in
financing their undergraduate or graduate education beyond what the
Federal Family Education Loan Program (FFELP) affords. All of the
loans were originated under the respective program underwriting
guidelines, specifically TERI, TuitionGard, or the self-insured loan
program's guidelines.

The TuitionGard student loans are insured by Landmark American
Insurance Company and American and Foreign Insurance Company, both
part of the Royal & SunAlliance USA Insurance Group, wholly-owned
subsidiary of Arrowpoint Capital Corp., for 100% of principal and
accrued interest less a 5% deductible.

Brazos Higher Education Service Corporation Inc, is the master
servicer for the trust.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Andrea Murad, 212-908-0896
Gary Santo, 212-908-9172
Sandro Scenga, 212-908-0278 (Media Relations)

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