KBRA Places Rating of MPOWER Education Trust 2025-A on Watch Downgrade and Comments on MPOWER’s Operational Status

KBRA has placed its rating on the Class A notes issued from MPOWER Education Trust 2025-A (MPOWER 2025-A), a private education loan ABS transaction, on Watch Downgrade due to deterioration in the collateral credit performance evidenced by increases in the cumulative net loss (CNL) rate, uncertainty regarding the Company’s ability to continue its operations which could contribute to further deterioration in collateral performance, and the class’s current credit enhancement level.

The table below displays the current capital structure and Watch Placement undertaken in this review as of the September 2026 distribution date (August 2026 collection period). To date, the Class A notes have received timely interest payments.

Cumulative net losses and delinquencies for the transaction are depicted in the table below as of the September 2026 distribution date (August 2026 collection period). Cumulative net losses are above KBRA’s base case assumption at the comparable month of seasoning.

MPOWER has completed two public securitizations to date: MPOWER 2025-A and MPOWER Education Trust 2024-A (MPOWER 2024-A). In addition to the Class A notes from MPOWER 2025-A, KBRA also maintains ratings on the Class A notes from MPOWER 2024-A which are not subject to the Watch Placement at this time, reflecting the transaction’s higher credit enhancement level of 50.92%.

KBRA has held discussions with the MPOWER regarding its operational status. According to the Company, MPOWER significantly reduced its workforce in April and July 2026, including certain senior executives such as the Chief Executive Officer and Chief Financial Officer. Given recent funding constraints, the Company has largely limited originations to new borrowers and is currently focused on originating loans to existing borrowers. If existing borrowers do not receive funding sufficient to complete their education, it could disrupt the borrowers' ability to continue their education and adversely affect their ability or willingness to repay existing loans. For MPOWER 2025-A, 32.2% of the current pool consists of in-school borrowers. MPOWER 2024-A currently has 0.5% of its pool represented by in-school borrowers.

Separately, an October 7, 2026 Bloomberg article, citing a letter from MPOWER's Chief Legal Officer to shareholders, reported that the Company is in discussions with secured lenders regarding the disposition of its remaining assets, with potential outcomes including a negotiated transfer or creditor seizure¹ . MPOWER management has disputed reports characterizing the Company as shutting down.

MPOWER serves as Sponsor and Master Servicer for MPOWER 2025-A. In May 2026, the servicing arrangements for MPOWER 2024-A and MPOWER 2025-A were amended, such that MPOWER remained as Master Servicer while Launch Servicing, LLC (Launch) became the permanent Subservicer and initial backup Master Servicer. In its capacity as Subservicer, Launch currently performs the majority of the day-to-day servicing functions for the transactions, including payment processing, borrower account maintenance, recordkeeping, delinquency management, decisioning of post payment programs and reporting. Launch also manages borrower workouts and collection activities for delinquent loans. MPOWER currently retains responsibility for certain later-stage delinquent accounts and certain international loans; however, Launch is working with MPOWER to assume these remaining functions and already has the relevant borrower records, servicing data, and operational relationships in place to support such a transition. Under the amended arrangements, Launch would assume the Master Servicer role if MPOWER were terminated or replaced as Master Servicer. Vervent Inc. (Vervent) remains a secondary backup servicing provider.

A Master Servicer default could occur under the master servicing agreement if MPOWER were to breach its obligations as Master Servicer or enter into bankruptcy or insolvency proceedings. To KBRA’s knowledge, such events have not occurred to date. Following a Master Servicer default and the termination of MPOWER as Master Servicer, Launch would assume the Master Servicer role in accordance with the transaction documents.

Founded in 2014, MPOWER is a private education lender headquartered in Washington, D.C. MPOWER’s product offering was developed to address the difficulties for international students in the U.S. and Canada to obtain education financing. The Company has provided education financing to over 25,000 students from over 100 countries. All U.S. Education Loans were originated by Bank of Lake Mills, an FDIC-insured bank organized in the State of Wisconsin and subsequently acquired by MPOWER or one of its affiliates. All Canadian Education Loans made under the MPOWER Private Education Loan Program were originated by the Company.

KBRA will continue to monitor the performance of the transaction and will seek to resolve or update the Watch Placement within 90 days.

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