Colleges and Universities Put on Notice That Contractual Nondisclosure Language May Violate the Higher Education Act and Trigger Enforcement Action
July 31, 2023
On July 13, 2023, the Office of Federal Student Aid issued an enforcement bulletin notifying institutions that using nondisclosure agreements (NDAs) or similar contracts that prevent or discourage current or former employees from communicating with the U.S. Department of Education may violate a requirement of cooperation with the Department under the Higher Education Act (HEA) and could result in enforcement action.
Specifically, the Department states that when an institution signs a program participation agreement, it agrees to comply with 34 C.F.R. § 668.24(f), which requires an institution and its third-party servicers to cooperate with the Department regarding audits, investigations, program reviews or other reviews authorized by law. In addition, third-party servicers are subject to a similar requirement to cooperate with the Department. According to 34 C.F.R. § 668.24(f)(2)(ii), such cooperation includes “providing reasonable access to personnel associated with the institutions or servicer’s administration of the title IV, HEA programs for the purpose of obtaining relevant information.”
