ED Revisits Third-Party Servicer and Incentive Compensation Guidance
Nancy Anderson, Kate Lee Carey
February 22, 2023
The Department of Education announced two initiatives that expand oversight of third-party providers to institutions of higher education that participate in federal financial aid programs.
On February 15, ED announced two separate initiatives (one final and one proposed) that impact service providers to institutions of higher education that participate in federal financial aid programs. Both initiatives are aimed at expanding ED’s oversight over third-party providers that collaborate with institutions to recruit students, develop instructional content and provide retention and other support services.
These initiatives will require institutions and their partners to carefully evaluate their existing arrangements, including assessing whether any services provided by a third party are newly subject to ED’s expanded third-party servicer guidance and monitoring whether the payment structure between the institution and provider needs modification. Both announcements include opportunities for the public to share feedback and ED is actively encouraging parties to provide comments.
