[Note: Readers can expect this page to be updated in the days leading up to the comment deadline]
A Department of Education Dear Colleague Letter regarding higher education institutions’ use of third-party servicers (TPS) could have a major impact on international education. The following offers talking points and guidelines to assist individuals and institutions in preparing a comment in response, a link to educate your members of Congress on this issue, and detailed background information on the new guidance for reference.
The new guidance is scheduled to take effect on September 1, 2023, but the Department will accept public comments on the guidance. According to the regulations.gov nonrulemaking docket, comments are due by March 30, 2023. The Dear Colleague Letter provides the following instructions:
"The community is invited to submit comments regarding the guidance presented in this Dear Colleague Letter within 30 days of this update to this letter via the Federal eRulemaking Portal at Regulations.gov, under Docket ID ED-2022-OPE-0103. Information on using Regulations.gov, including instructions for finding a rule on the site and submitting comments, is available on the site under "FAQ." We are especially interested in comments on the impact of continuing the existing limitation on institutions contracting with third-party servicers operating outside the United States or owned or operated by individuals who are not U.S. citizens, nationals, or permanent residents, including how to address the Department’s concerns about the ability to hold such servicers liable if necessary."
How to Submit a Comment
NAFSA will be commenting, but highly encourages individual institutions to consult with their general counsel offices and comment as well. Including in your comment letters specific examples of how the new definition of Third-Party Servicer would impact your school can help the Department of Education to assess any unintended or unforeseen consequences of their policy.
Institutional comments should be signed by a representative of the institution and include their contact information in the event of any follow-up questions or concerns. Note that this comment will be publicly available, so including personal addresses or cell phone numbers is not recommended.
Key Points to Consider in Shaping Your Comment
- The February 15, 2023 Dear Colleague Letter expands the definition of third-party servicers in a way that entirely disrupts international education at U.S. colleges and universities. This includes partnerships in support of international student recruitment, U.S. study abroad, and global academic collaboration and exchange.
- Any aspect of a Title IV program is at risk, even if the recruitment, content, or course development or delivery is not connected to students utilizing Title IV funding.
- The expanded definition of TPS is overbroad – going well beyond what was originally intended to be covered by the law – and would cause significant harm to the existing programs at our institution.
The original guidance describes TPS as an entity that contracts “to administer, through either manual or automated processing, any aspect of the institution's participation in any Title IV, HEA program” (34 CFR 668.2(1)). However, the regulatory definition also includes a list of functions all of which relate only to administrative, technical, financial or business “services” that support an institution’s handling of Title IV, HEA program funding. This was reasonably read to apply only to Title IV funds management.
The new updated guidance expands the definition of third-party servicer to activities sharing no similarity to the list included in its regulations. These are entities that provide instructional content consisting of "any percentage of a Title IV-eligible program", perform functions and related activities in recruitment and application process, student and institutional eligibility, and student retention. These are many individuals and entities who are essential to the success of international education activities, but who are unrelated to the institution’s actual administration of Title IV funding.
Since this newly broad guidance maintains a prohibition against institutions contracting with a servicer or subcontractor located outside the United States, and that restriction pertains to “any aspect of an institution’s participation in a Title IV program,” institutions simultaneously contracting with overseas entities and enrolling Title IV students will not be in compliance with this new guidance.
This new guidance, if implemented “as is,” would cause so much harm that institutions would likely challenge its legality through the court system.
Title IV funds are used by American students who cannot independently fund their study abroad experiences, as outlined in The Federal Student Aid Handbook, Volume 2, Chapter 2. If students cannot use Title IV funds for study abroad, the opportunity becomes out of reach for all but the wealthiest of Americans who do not receive federal aid. The prohibition on using entities outside the U.S. to provide ANY instructional content per the revised TPS definition would restrict study abroad to locations to have U.S.-owned services and campuses. The education abroad community champions access to programs and diverse locations, both of which would be severely curtailed under the updated guidance.
- Urge the Department to rescind the February 15, 2023 published guidance.
- If this is not granted, the Department should clarify that study abroad programs, international partnerships and international student recruitment and retention are not covered by this new TPS guidance.
Questions to Guide Personal and Institutional Responses
For each, describe your example and what your institution would have to do to become compliant with the new guidance. For further definitions related to the questions below, see the appropriate section of the table in the Department of Education Dear Colleague Letter.
- Does your institution rely on entities outside the United States to:
interact with prospective students for the purposes of recruiting or securing enrollment?
provide prospective students with information on educational programs, application and document requirements, deadlines, and the enrollment process?
assist students with the completion of application and enrollment processes or offer admission and/or enrollment counseling?
process admissions applications, including the collection of documents, screening, and/or determining initial or final qualification of applicants
establish or modify admissions standards for acceptance into the institution or any educational programs offered by the institution?
- Does your institution rely on entities outside of the U.S. to keep an individual enrolled at an institution by:
monitoring academic engagement and/or daily attendance?
responding to inquiries from students and/or their families regarding assistance or resources designed to help students maintain enrollment in the institution/program?
- Does your institution rely on entities outside the U.S. to provide ANY instructional content, including delivering instruction or mandatory tutoring, assessing learning, and developing course materials? (The updated guidance states that instructional content providing any percentage of a Title IV-eligible program at an institution is covered by the guidance.)
Study Abroad Examples
- U.S. University sends students to a study abroad program at Host University in South Korea via a contractual reciprocal exchange agreement with Host University. A student uses their Title IV federal financial aid towards their tuition at the U.S. Institution and enrolls abroad in courses with instructional content taught by Host's professors who assess their learning. Students live in dorms and eat at cafeterias operated by Host International University.
- U.S. University contracts with Host Program Provider, a study abroad provider based in Senegal. Host contracts with local universities in Western Africa to create semester-long study abroad programs for U.S. students. A student uses their Title IV federal financial aid to access a program managed by Host Program Provider, which uses local vendors and features courses taught by local professors. On weekends, Host coordinates cultural excursions for students where logistical sub-contractors, such as bus drivers and tour guides, are local. U.S. University contracts with program providers like Host because a diverse portfolio of education abroad programs are key complements to students' studies but require onsite local staff and expertise. The host assists in recruitment, application review, deadlines, site-specific orientations, maintains contact with local faculty, housing, develops instruction content, and assesses students.
- A professor at U.S. University offers a two-week intensive course on business in Argentina. Students at U.S. University will travel with their professor to Argentina for the course. U.S. University coordinates the two-week faculty-led program, which includes contracting with local vendors for housing, developing cultural experiences led by local guides, and arranging plans for meals. A student at U.S. University uses their Title IV federal financial aid to take this U.S. University course taught abroad.
International Student Recruitment and Application Examples
- Any local third-party agents contracted to perform recruitment and admission counseling functions for the institutions. These recruiters act on behalf of the institutions to provide information, advising on admission process, etc. to students and are covered by the guidance if they or their subcontractors are based outside the U.S.
International Partnerships Examples
- Disrupts joint degree and dual degree program arrangements between U.S. and foreign colleges and universities.
Other Ways to Take Action
Write your elected officials using NAFSA’s simple system to express your concerns. A sample message will be generated that can easily be customized.
The Department of Education (Department) published a Dear Colleague Letter, Requirements and Responsibilities for Third-Party Servicers and Institutions (Updated Feb. 28, 2023), asserting an expanded definition of “Third-party servicer” (TPS) that now includes third party entities “performing the functions of student recruiting and retention, the provision of software products and services involving Title IV administration activities, and the provision of educational content and instruction.”
The TPS definition of TPS at 34 CFR 668.2(1) describes contracts “to administer, through either manual or automated processing, any aspect of the institution's participation in any Title IV, HEA program.” However, the regulatory definition also includes a list of functions all of which relate only to administrative, technical, financial or business “services” that support an institution’s handling of Title IV, HEA program funding. This, and the “manual or automated processing” language in the definition preface, had prior to this policy change been reasonably read to apply only to Title IV funds management.
What does it mean to be considered a Third-Party Servicer?
Being classified as a TPS also subjects an entity or individual to existing TPS reporting and auditing requirements, and to restrictions such as the requirement that a TPS cannot be "located outside of the United States or [be] owned or operated by an individual who is not a U.S. citizen or national or a lawful U.S. permanent resident." Here’s how the Dear Colleague Letter summarizes these obligations:
“To protect the interests of institutions, taxpayers, and students, an institution may not contract with a TPS to perform any aspect of the institution’s participation in a Title IV program if the servicer (or its subcontractors) is located outside of the United States or is owned or operated by an individual who is not a U.S. citizen or national or a lawful U.S. permanent resident. This prohibition applies to both foreign and domestic institutions.
If the Secretary determines that a TPS has not met the required standards of conduct or has violated its fiduciary duty, the Secretary may fine the servicer or limit, suspend, or terminate the servicer’s participation in the Title IV programs under 34 C.F.R. part 668, subpart G. A former TPS, once subjected to a termination action by the Secretary, may not enter into a written contract to administer any aspect of an institution’s participation in the Title IV programs unless financial guarantees and acknowledgements of joint and several liability under 34 C.F.R. 668.25(d)(2) are provided.”
A question of scope
In its Dear Colleague Letter, the Department admits that it “has not previously notified the community that the performance of these functions subjects an entity to TPS requirements,” and then proceeds to characterize this expansion of scope as simply “guidance to clarify.”
In fact, the Department’s expansion of the definition of Third Party Servicer to activities sharing no similarity whatsoever to the list included in its regulations, by default brings under the scope of this assertion many individuals and entities who are essential to the success of international education activities, but who are unrelated to the institution’s actual administration of Title IV funding.