2008-04-11 23:14:41 -

- 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)