ED Updates Effective Date of Guidance on Third-Party Servicers After ‘Uncertainty’

By Maria Carrasco, NASFAA Staff Reporter

The Department of Education (ED) on Tuesday 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. 

“An earlier version of this letter invited the community to submit comments on the guidance in this letter so that we would have an opportunity to hear from the field about areas that are unclear or could be improved,” the letter states. “We recognize that this has created some uncertainty around exactly what requirements and reporting deadlines will apply. Therefore, as noted above, we are adjusting the effective date of the guidance to September 1, 2023.”

Members can listen to our latest episode of “Off the Cuff,” where NASFAA Senior Policy Analyst Jill Desjean discusses what concerns institutions should have with this updated guidance and what it means to be classified as a third-party servicer. As some outlets are reporting, those in higher education were shocked to see the broadened definition of what it means to be a third-party servicer. 

Last week, NASFAA and other higher education organizations sent a letter to ED requesting an extension of the original May 1, 2023 deadline to submit information, as well as an extension of the deadline to submit comments on ED's planned expansion of the definition of when an outside contractor is a third-party servicer.

“We support the Department in its efforts to ensure appropriate oversight of Title IV programs and protections for students and taxpayer dollars,” the letter states. “We respectfully request the Department to provide more time to allow colleges and universities to better understand the guidance, to surface any unintended consequences that the Department may wish to address, and then to comply.”

Comments on this topic can be submitted through and/or to [email protected]. Stay tuned to Today’s News for more coverage on this guidance. 


Publication Date: 3/1/2023

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