Fitch Rates Kentucky Higher Education Student Loan Corp. Student Loan Revs Series 2006

Fitch rates the following student loan revenue bonds issued by Kentucky Higher Education Student Loan Corporation:

Ratings for New Issuance:

-- $28,175,000 Senior Series 2006A-1 (Tax-Exempt Auction Rate Certificates), 'AAA';

-- $42,825,000 Senior Series 2006A-2 (Taxable Auction Rate Certificates), 'AAA';

-- $29,000,000 Subordinate Series 2006B-1 (Tax-Exempt Auction Rate Certificates), 'A'.

In addition, Fitch confirms the ratings of the following student loan revenue bonds:

-- $18,850,000 Senior Series 2004A-1 (Tax-Exempt Auction Rate Certificates), 'AAA';

-- $57,550,000 Senior Series 2004A-2 (Tax-Exempt Auction Rate Certificates), 'AAA';

-- $57,600,000 Senior Series 2004A-3 (Tax-Exempt Auction Rate Certificates), 'AAA'

-- $57,600,000 Senior Series 2004A-4 (Tax-Exempt Auction Rate Certificates), 'AAA'

-- $72,400,000 Senior Series 2004A-5 (Taxable Auction Rate Certificates), 'AAA'

-- $75,000,000 Senior Series 2004A-6 (Taxable Auction Rate Certificates), 'AAA'

-- $11,000,000 Subordinate Series 2004B-1 (Tax-Exempt Auction Rate Certificates), 'A'

-- $80,000,000 Senior Series 2005A-1 (Tax-Exempt Auction Rate Certificates), 'AAA'

-- $45,000,000 Senior Series 2005A-2 (Taxable Auction Rate Certificates), 'AAA'

-- $45,000,000 Senior Series 2005A-3 (Taxable Auction Rate Certificates), 'AAA'

-- $70,000,000 Senior Series 2005A-4 (Taxable Auction Rate Certificates), 'AAA'

-- $50,000,000 Senior Series 2005A-5 (Taxable Auction Rate Certificates), 'AAA'

-- $40,000,000 Senior Series 2005A-6 (Taxable Auction Rate Certificates), 'AAA'

-- $50,000,000 Senior Series 2005A-7 (Taxable Auction Rate Certificates), 'AAA'

-- $20,000,000 Subordinate Series 2005B-1 (Tax-Exempt Auction Rate Certificates), 'A'

Fitch assigns ratings to the new issuance of bonds as listed above. The ratings are based on the quality of the FFELP student loan portfolio, the credit enhancement provided and the legal structure. The ratings reflect the ability of the trust estate to pay bond principal at maturity and pay timely interest. The ratings do not address any carryover amounts that may accrue on the bonds nor do they address the ability of auction bondholders to redeem their bonds at an auction now or in the future.

The series 2006 bonds are issued under an indenture dated August 1, 2004 as supplemented by the Fifth Supplemental Indenture dated August 1, 2006 by and between KHESLC and Wells Fargo Bank, N.A., the trustee. The Series 2006 Bonds are being issued to finance the origination and acquisition of Federal Family Education Loan Program (FFELP) student loans, make a deposit to the debt service reserve fund, and pay the cost of issuance.

The tax-exempt series 2006 bonds are 35-Day Auction Rate Securities, with interest paid semiannually. The taxable series 2006 bonds are 28-Day Auction Rate Securities, with interest paid on the day following each auction period. The legal final maturity for the bonds is June 1, 2036.

The reserve account is sized at 0.50% of the bonds outstanding with a $500,000 minimum. Funds in the reserve account can be used to pay timely interest on the bonds and principal at maturity.

Currently, 100% of the collateral securing the bonds are loans originated under the Federal Family Education Loan Program (FFELP). The loans are guaranteed up to at least 97% of principal and accrued interest by an eligible guarantor(s), depending on loan origination date, and reinsured by the U.S. Department of Education up to the same amounts.

Kentucky Higher Education Student Loan Corporation (KHESLC) is an independent de jure municipal corporation and political subdivision of the Commonwealth of Kentucky. Kentucky expects to service the trust's entire FFELP student loan portfolio. KHESLC currently services approximately $1.5 billion of student loans supporting its bonds outstanding, as well as approximately $6.3 billion of student loans on a third party basis.

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.