Department of Education Delays Implementation of Third-Party Servicers Guidance

Earlier this week, the Department of Education (Department) announced that the agency is delaying the effective date of updated guidance on third-party servicers. The updated guidance clarifies when companies and others who provide recruitment services to institutions of higher education will fall into the third-party servicers category. “Specifically, [the Department] will delay the effective date of the guidance letter, and the September 1, 2023, date will no longer be in effect. The effective date of the revised final guidance letter will be at least six months after its publication, to allow institutions and companies to meet any reporting requirements. Deadlines for audit and contractual requirements will follow in fiscal years that begin after the effective date for the reporting requirements.

The announcement lists several activities that it does not consider to be third-party servicer relationships:

  • Study abroad programs.
  • Recruitment of foreign students not eligible for Title IV aid.
  • Clinical or externship opportunities that meet requirements under existing regulations because they are closely monitored by qualified personnel at an institution.
  • Course-sharing consortia and arrangements between Title IV-eligible institutions to share employees to teach courses or process financial aid.
  • Local police departments helping to compile and analyze crime statistics, unless they write or file a report on behalf of an institution for compliance purposes.

CGS and the broader higher education community have been active on this issue and recently sent a letter to Secretary of Education Miguel Cardona  concerning the proposed changes to the guidance.