USDE Delays Third-Party Servicers and Institutions Guidance Effective Date

As part of the Middle States Commission on Higher Education’s (MSCHE) strategic priority to promote advocacy initiatives for its members and others, we want to bring to your attention the recent announcement regarding guidance on third-party servicers.

The United States Department of Education (USDE) announced that it has delayed the effective date of the Dear Colleague Letter (DCL) GEN-23-03 guidance on Requirements and Responsibilities for Third-Party Servicers and Institutions to allow additional time to review the more than 1,000 comments received regarding the guidance.

Read the USDE blog post.

The DCL will not become effective on September 1, 2023, and instead USDE will establish an effective date for a revised final guidance letter at least six months after publishing the revised guidance. The announcement also notes that USDE does not consider the following to constitute third-party servicer relationships:

  • Study abroad programs
  • Recruitment of foreign students not eligible for Title IV aid
  • Clinical or externship opportunities that meet requirements under existing regulations because they are closely monitored by qualified personnel at an institution
  • Course-sharing consortia and arrangements between Title IV-eligible institutions to share employees to teach courses or process financial aid
  • Dual or concurrent enrollment programs provided through agreements with high schools and local education agencies, which are exempt because they do not involve students receiving Title IV aid
  • Local police departments helping to compile and analyze crime statistics, unless they write or file a report on behalf of an institution for compliance purposes

The Department will continue to identify any other servicers that do not constitute third-party servicers as comments are reviewed.

On March 30, 2023, President Heather F. Perfetti submitted a letter on behalf of MSCHE in response to USDE’s request for information regarding requirements and responsibilities for third-party servicers and institutions.