On May 16, 2023, the United States Department of Education (the \u201cDepartment\u201d) updated its Third Party Servicer Guidance issued in GEN-23-03.\u00a0 The new Dear Colleague Letter (\u201cDCL\u201d) officially delays indefinitely the previously issued guidance.\u00a0 It also removes the prohibition on contracts between institutions of higher education and foreign owned or operated third party servicers.<\/p>\n
This DCL replaces the prior update posted in a blog by Undersecretary Kvaal, in which he commented that the department was effectively delaying the prior DCL.\u00a0 This formalizes that announcement.<\/p>\n
The DCL indicates that institutions will be provided with at least six (6) months advance notice before the effective date of any future formal guidance.\u00a0 The deadlines for audit and contractual requirements in any new guidance will be delayed until the institution\u2019s first fiscal year beginning after the effective date for the reporting requirements.\u00a0 We read this to mean that institutions and Third Party Servicers will not be required to retroactively implement the new guidance.<\/p>\n
Finally, the Department also clarified that institutions may contract with foreign owned Third Party Servicers.\u00a0 It rescinded earlier guidance on this issue.\u00a0 The Department did note, however, that this issue may be subject to rulemaking in the future.<\/p>\n
Institutions and potential Third Party Servicers should continue to evaluate how they may be impacted by new regulation or guidance in this area.\u00a0 It is clear that the Department is intent on increasing its oversight of Third Party Servicers by expanding the scope of services that fall into the Third Party Servicer bucket in the Higher Education Act.\u00a0 In addition, the Department has identified<\/a> Third-Party Servicers and Related Issues for rulemaking in the fall of 2023. Concerned parties should continue to monitor developments from the Department as they arise over the next several months.<\/p>\n","protected":false},"excerpt":{"rendered":" On May 16, 2023, the United States Department of Education (the \u201cDepartment\u201d) updated its Third Party Servicer Guidance issued in GEN-23-03.\u00a0 The new Dear Colleague Letter (\u201cDCL\u201d) officially delays indefinitely the previously issued guidance.\u00a0 It also removes the prohibition on contracts between institutions of higher education and foreign owned or operated third party servicers. This … <\/p>\n