After Input, Department to Revise Third-Party Servicer Guidance

In a significant reversal, the Department of Education announced major changes to recent guidance governing third-party servicers (TPSs). Notably, the Department acknowledged the concerns raised by the higher education community and announced revisions that would extend the compliance deadline and clarify exemptions for an array of services. 

Specifically, the Department noted that it would:

• Extend the compliance deadline to at least six months after publication of revised TPS guidance.
• Clarify that contracts involving the following activities do not constitute TPSs:
  • Study abroad programs;
  • Recruitment of international students;
  • Clinical and externship opportunities;
  • Course-sharing arrangements between Title VI eligible institutions;
  • Dual or concurrent enrollment programs; and
  • Police departments that help compile and analyze crime statistics, unless they write or file a report on behalf of an institution for compliance purposes.
• Identify other services that may be exempt from TPS coverage.
• Remove requirements related to foreign ownership and instead consider this issue as part of the upcoming negotiated rulemaking.
• Consider clarifying or narrowing the scope of the guidance in other areas, including software and computer services, retention, and instructional content.

The Department did not provide a timeline for when the new guidance will become available but noted that TPS guidance documents that governed prior to the 2023 changes will remain in effect until new guidance is issued. Although the Department did not explicitly rescind the 2023 guidance, the agency’s action appears to have effectively suspended its operation for the time being.

For more information, please contact:
Jody Feder