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Fitch to Rate Navient Student Loan Trust 2016-7; Outlook Stable; Presale IssuedLink to Fitch Ratings' Report: Navient Student Loan Trust Series 2016-7 https://www.fitchratings.com/site/re/889452 Fitch Ratings expects to rate Navient Student Loan Trust 2016-7 as follows: --$896,000,000 floating rate class A notes 'AAAsf(EXP)'; Outlook Stable. KEY RATING DRIVERS U.S. Sovereign Risk: The trust collateral comprises Federal Family Education Loan Program (FFELP) loans, 100% of which are rehabilitated (rehab) loans, with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The U.S. sovereign rating is currently 'AAA'/Stable Outlook. Collateral Performance: Fitch assumes a base case default rate of 48.2% for non-consolidation loans, 57.2% for consolidation loans and a weighted average base case default rate of 52.7%. For the 'AAAsf' scenario, the default rate is 100% for all loans. The claim reject rate is assumed to be 0.50% for the base case and 3.0% for the 'AAAsf' case. Fitch applies the standard default timing curve, constant default rate (CDR) and prepayment assumptions for FFELP loans in its cash flow analysis. Current levels of deferment, forbearance and Income Based Repayment are 6.7%, 15.7%, and 11.4%, respectively, which are used as the starting point in cash flow modeling. Subsequent declines or increases are modeled as per criteria. Borrower benefits were also applied and stressed in the cash flows results. Basis and Interest Rate Risk: Fitch applies its standard basis and interest rate stresses to this transaction as per criteria. Payment Structure: Cash flow scenarios for the 2016-7 notes were satisfactory under 'AAAsf' stress case, using Fitch's Student Loans ABS (News - Alert) cash flow model (SLABS). Total credit enhancement (CE) is provided by overcollateralization and excess spread, and at closing, total parity is expected to be 104.6%. Liquidity support is provided by a reserve account that is funded at closing with note proceeds of $40.4 million or 4.5% of the pool balance. The specified reserve requirement remains at 4.5% until the March 2018 distribution date where it steps down to 1.5% until the June 2019 distribution date, when it remains as the greater of 0.25% and $897,012. Maturity Risk: Fitch's SLABS cash flow model indicates that the senior notes are paid in full on or prior to their legal final maturity of March 25, 2066 in the 'AAAsf' maturity stress scenario. Operational Capabilities: The 2016-7 portfolio will be serviced by Navient Solutions, Inc. (Navient). Fitch deems Navient to be an acceptable servicer of FFELP loans. RATING SENSITIVITIES Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a build-up of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades. Fitch's stress analysis is discussed in the presale titled "Navient Student Loan Trust 2016-7", dated Oct. 24, 2016 available on www.fitchratings.com or by clicking on the link above. DUE DILIGENCE USAGE No third-party due diligence was provided or reviewed in relation to this rating action. REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS A description of the transaction's representations, warranties and enforcement mechanisms (RW&Es) that are disclosed in the offering document and which relate to the underlying asset pool is available by accessing the appendix referenced under "Related Research" on the presale report. The appendix also contains a comparison of these RW&Es to those Fitch considers typical for the asset class as detailed in the Special Report titled "Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions," dated May 2016. Additional information is available at www.fitchratings.com. Applicable Criteria Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016) https://www.fitchratings.com/site/re/886006 Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 17 May 2016) https://www.fitchratings.com/site/re/879815 Global Structured Finance Rating Criteria (pub. 27 Jun 2016) https://www.fitchratings.com/site/re/883130 Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 26 Jul 2016) https://www.fitchratings.com/site/re/881705 Related Research Navient Student Loan Trust Series 2016-7 Appendix https://www.fitchratings.com/site/re/889490 Additional Disclosures Dodd-Frank Rating Information Disclosure Form https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1013617 Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1013617 Endorsement Policy https://www.fitchratings.com/regulatory ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEB SITE AT 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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright (c) 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. 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