ACE, Other Groups Send Comments to ED on Third-Party Servicers Guidance April 03, 2023 Section 1 ContentOn 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that are subject to TPS requirements, even though, in most cases, these entities are not OPMs.Unless the guidance is rescinded, it is likely to result in disruptions and, in some cases, terminations of relationships that provide critically important services for students.Click here to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. 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