Morningstar DBRS finalizes credit ratings for Navient Education Loan Trust 2026-A notes

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Navient 2026-A credit ratings

Highlights

Morningstar DBRS assigned final ratings of AAA (sf) to $428.3 million Class A, AA (sf) to $62.8 million Class B, A (sf) to $20.6 million Class C, and BBB (sf) to $38.0 million Class D notes for Navient Education Loan Trust 2026-A.
The ratings reflect the credit enhancement structure comprising overcollateralization, subordination, reserve and interest accounts, excess spread, and a sequential-pay waterfall with turbo amortization provisions.
Morningstar DBRS evaluated Earnest and its bank partners as acceptable loan originators and conducted legal and operational assessments consistent with its updated March 27, 2026 macroeconomic assumptions.

Transaction structure and rating basis

As reported by Morningstar DBRS, the agency finalized provisional ratings of AAA (sf) for $428.3 million of Class A notes, AA (sf) for $62.8 million of Class B notes, A (sf) for $20.6 million of Class C notes and BBB (sf) for $38.0 million of Class D notes issued by Navient Education Loan Trust 2026-A.

The agency says the ratings are based on the form and adequacy of credit enhancement in the deal, including overcollateralization, subordination, reserve account cash, a capitalized interest account and excess spread. It also says transaction cash flows are sufficient to repay investors under stress scenarios consistent with the assigned ratings.

Morningstar DBRS also points to the transaction’s sequential-pay structure and provisions that can force the most senior outstanding notes into full turbo principal amortization under certain conditions. Additional considerations include the credit quality of the student loans and borrowers, as well as the origination and underwriting capabilities of Earnest and its bank partners.

Servicing, legal protections and market context

Morningstar DBRS says it conducted an operational assessment of Earnest and considers the company and its bank partners acceptable originators of in-school private student loans. The agency also evaluated the ability of the servicer and subservicer to manage collections on the collateral pool and perform other required duties.

The legal analysis covers true sale of the student loans, nonconsolidation of the trust and the trust’s first-priority security interest in the assets, in line with Morningstar DBRS criteria for U.S. structured finance. The agency says its assumptions also incorporate its baseline macroeconomic scenarios for rated sovereign economies from its March 27, 2026 update, which replaced the moderate and adverse COVID-19 pandemic scenarios first published in April 2020.

Morningstar DBRS says the ratings address the credit risk tied to noteholders’ interest distribution amounts and principal payments, but not nonpayment risks linked to other contractual obligations. It also says no environmental, social or governance factors had a significant or relevant effect on the credit analysis.

In our previous report on the Trump administration’s plan to transfer management of federal student-loan accounts, we outlined a phased shift of 9 million defaulted borrower accounts from the Department of Education to the Treasury Department. We noted that preparations had begun without a firm timeline, alongside concerns that the handover could increase operational complexity and borrower confusion—especially after involuntary collections were paused earlier this year.

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