February 15, 2023
SUBJECT: Requirements and Responsibilities for Third-Party Servicers and Institutions (Updated Feb. 28, 2023)
SUMMARY: This letter updates guidance to institutions that contract with a third-party servicer (TPS) to administer any aspect of the institution’s participation in the student assistance programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA).
Dear Colleague:
Since we issued our most recent Dear Colleague Letters regarding third-party servicers, the U.S. Department of Education (Department) has reviewed numerous contractual arrangements between institutions and outside entities. These reviews have confirmed that most activities and functions performed by outside entities on behalf of an institution are intrinsically intertwined with the institution’s administration of the Title IV programs and thus the entities performing such activities are appropriately subject to TPS requirements. The HEA makes clear that agreements to administer “any aspect” of an institution’s participation in the Title IV programs fall within the scope of the Department’s TPS oversight authority. 20 U.S.C. § 1088(c). The information gathered in the Department’s review highlighted the need for an updated list of functions and activities that fall within the scope of the TPS requirements.
