On Feb. 15, 2023, the U.S. Department of Education issued guidance that significantly expands the definition of “third-party servicer” to include services completed by many online program managers (OPMs) and entities providing other services that historically have not been considered third-party servicers. Institutions and entities considered third-party servicers under the new guidance are subject to mandatory reporting requirements by May 1, 2023.
New Guidance – Who Is a Third-Party Servicer?
On Feb. 15, 2023, the Department released a Dear Colleague Letter, GEN-23-03, that significantly alters the definition of a third-party servicer in Title IV of the Higher Education Act of 1965, as amended, and its implementing regulation, 34 C.F.R. § 668.2. Historically, third-party servicers were limited to entities that helped with financial aid, such as by making sure funds are administered appropriately. The Department’s new third-party servicer definition will include many OPMs and other entities not previously considered a third-party servicer.
