If you were familiarizing yourself with The Department of Education’s (ED) updated third-party servicer guidance, hold that thought for a moment. Due to some confusion and uncertainties, the effective date for these updates has been prolonged.
The Department of Education on Tuesday (2/28) announced in an updated Dear Colleague Letter (DCL) that it is adjusting the effective date of its new guidance on third-party servicers to Sept. 1, 2023, from its original date, rather than immediately as of February 15. Additionally, the letter extended the public comment period to 30 days after publication of the updated DCL on February 28.
The letter, first published on February 15, provided guidance that clarifies online program managers (OPMs) are considered third-party servicers and, as such, are subject to institutional reporting rules and annual third-party servicer audits. The original letter states institutions will be required to report any arrangements with third-party servicers that have not been reported to ED, and entities meeting the definition of a third-party servicer would have been required to submit the Third-Party Servicer Data Form to ED by May 1, 2023.
Now, rather than the February date, the effective date of the guidance was moved to Sept. 1, 2023, along with the reporting deadline. ED states in the updated letter that it has reviewed numerous contractual arrangements between institutions and outside entities and has recognized that the guidance has created some “uncertainty” around exactly what requirements and reporting deadlines will apply. Feb. 15 guidance from the Education Department expanded the types of organizations covered under regulators’ third-party servicer definition. A letter outlining the new guidance in part framed it around online program managers, or OPMs, whose ability to make money through revenue-share agreements with colleges is the subject of a separate regulatory review announced the same day.
But the department also wrote that for third-party servicers, “most activities and functions performed by outside entities on behalf of an institution are intrinsically intertwined” with Title IV programs. It revised guidance to state that parties involved in student recruiting, retention, software for Title IV administration, educational content and instruction count as third-party servicers and as such need to comply with regulatory requirements.
The changes set off a slew of questions about just how broad the new guidelines actually are — and how quickly they were being put in place.
Observers suggested the new definition could cover as third-party servicers companies that provide learning management systems or even textbook publishers. Also potentially included are organizations like police departments that compile crime statistics for colleges, hospitals that offer clinical experience, and colleges’ online extensions that work with campuses, according to the American Council on Education, the higher ed sector’s top lobbying organization.
As mentioned in our first post on third-party servicers, If your institution is seeking help with these new updates or is in need of a third-party service, keep College Aid Services in mind. We are an audited third-party servicer with over 20+ years of experience and knowledge. Contact us here . We look forward to connecting with you soon.
Source:
Department of Education Updates Regarding Third-Party Servicer Guidance
Education Department’s new third-party servicers definition won’t go into effect until September
Requirements and Responsibilities for Third-Party Servicers and Institutions (Updated Feb. 28, 2023)