On behalf of more than
80 other higher education organizations, ACE sent comments
March 29 to the Department of Education (ED) about the guidance on third-party
servicers (TPS) that ED released in February.
The comment letter outlines
the full range of problems and harmful consequences the guidance presents for
colleges and universities and their students because of its “expansive new
definition” of TPS, and calls on ED to rescind the current Dear Colleague
Letter (DCL) that contains the new guidance.
The department should
then “identify alternate approaches that are better
targeted to the issues of concern that the Department seeks to address,” the
organizations say in the letter. “Rescinding the guidance will allow time for
the Department to carefully craft its next steps while minimizing the legal uncertainty and compliance challenges
facing institutions under the DCL, particularly with respect to relationships
with study abroad programs and other international entities that are unable to
meet TPS requirements.”
The department first issued
the DCL on Feb. 15, dramatically expanding the definition of TPS by increasing
the functions and activities that, if performed for an institution by an
outside entity, would subject that entity to TPS requirements. This is a
significant change to attempt through subregulatory guidance, and one that
appears to exceed the department’s authority.
Since 1992, federal laws and regulations have defined a TPS
as an outside entity with responsibility for the administration of an institution’s
student financial aid programs. The regulations and the statute have been long
interpreted to apply only to those entities that are specifically involved in
the administration, management, and distribution of Title IV program funds.
Although the intended target of the guidance appears to be
online program management companies (OPMs), the new guidance will dramatically
increase the number of outside entities that are subject to TPS requirements,
even though, in most cases, these entities are not OPMs.
Unless the guidance is
rescinded, it is likely to result in disruptions and, in some cases,
terminations of relationships that provide critically important services for
students.
Click
here to view TPS DCL background information and implications for campuses.