A Matter of Kind, Not Degree

Addressing the arguments that 'not much has changed' with TPS guidance


On the off chance that you’re just getting introduced to the TPX expansion topic at hand, read the initial coverage, follow-up post, Q&A for premium subscribers, and description of the delay in guidance.

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On to the update.

By reading the actual delay in guidance text from the US Department of Education (ED) as well as public commentary from the advocacy groups who inspired the TPS expansion, it is clear that one of their primary responses to the growing pushback is that not much has changed, it’s just that people ignored previous guidance.

In the updated guidance that changed the effective date to September 1st:

An earlier version of this letter invited the community to submit comments on the guidance in this letter so that we would have an opportunity to hear from the field about areas that are unclear or could be improved. We recognize that this has created some uncertainty around exactly what requirements and reporting deadlines will apply.

Clare McCann, formerly with ED and currently with Arnold Ventures, which is likely the leading advocacy group driving these changes, share a Twitter thread this week that attempted to argue the no big change viewpoint.

From the referenced Stephanie Hall Twitter thread

This argument is more than just a reaction to the pushback, it represents the thinking behind the vast expansion of TPS classification and should be examined.


It’s worth starting with the actual definition of third-party servicer contained in the original HEA federal law.

Third-party servicer: An individual or a State, or a private, profit or nonprofit organization that enters into a contract with an eligible institution to administer, through either manual or automated processing, any aspect of the institution's participation in any Title IV, HEA program.

“Any Title IV, HEA program” is the important phrase, and it is key to understand that in the US, higher education is not the direct responsibility of the federal government, as ED describes:

Education is primarily a State and local responsibility in the United States. It is States and communities, as well as public and private organizations of all kinds, that establish schools and colleges, develop curricula, and determine requirements for enrollment and graduation. The structure of education finance in America reflects this predominant State and local role.

The federal government’s role in higher education is relegated to several areas, and perhaps the most important is the organization and provision of financial aid. That it what Title IV is all about.

Overview of Title IV refers to the financial aid programs for postsecondary students authorized under Title IV of the Higher Education Act of 1965, as amended (Title IV, HEA), administered by the U.S. Department of Education, and listed in 34 CFR 668.1(c).

“Title IV programs” refers to specific financial aid mechanisms, such as:

Title IV funds are federal student aid funds, which are from federal student aid programs administered by the U.S. Department of Education. Title IV funds include Direct Subsidized/Unsubsidized Loan, Direct Graduate PLUS Loan, Direct PLUS Loan, Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (SEOG), Federal Perkins Loan, and TEACH grants.

Until February 15th, the common understanding of HEA’s definition of TPS as administering any aspect of a Title IV program as just that - directly working on the financial aid. The best source I’ve seen for describing what this means lists these examples:

* Process student financial aid applications, including FAFSA or Pre-FAFSA completion services performed on behalf of an eligible institution

* Collect, review, and/or maintain supporting documentation required to process Title IV funds

* Determine student eligibility and related activities (R2T4, SAP, Verification, Professional Judgment, Dependency Override, etc.)

* Award, certify, originate, and/or disburse Title IV funds

* Delivery of Title IV credit balance refunds to students or parents (via cash, check, ACH, debit card, or other means)

* Prepare and/or certify request for advance or reimbursement funding

* Fiscal reconciliation of Title IV, HEA program accounts

* Provide entrance and exit loan counseling, including in person, by mail, or electronically

* Federal Perkins Loan servicing

* Federal Perkins Loan collections

* Financial aid counseling, including assistance provided to students or parents in person, over the phone, or by any electronic means, including operation of call centers

* Perform default prevention management functions for Direct Loan, FFEL, and/or Perkins Loan programs, including cohort default analysis, enhanced loan counseling, delinquency assistance, development/implementation of a default management plan, and/or other default prevention outreach activities

* Preparation/dissemination of required consumer information disclosures, including general, campus crime, drug and alcohol prevention, graduation rates, placement rates and gainful employment disclosures

* Preparation and or submission of required reports including enrollment reporting to NSLDS, IPEDS, Campus Crime and Security, and FISAP reporting

* Financial aid consulting, including financial aid staffing, interim management, processing support, and/or development and maintenance of written policies and procedures

Everything in this list directly relates to handling federal financial aid or direct reporting of that financial aid. And this has been the common understanding until February 15, 2023. Where did I get that list? The very data form that ED is asking vendors to submit under the new guidance. The one that ED never thought to update based on the new guidance.

What Changed?

With the release of the new Dear Colleague Letter 23-03 on February 15th, ED used a rhetorical device of adding one bullet to the guidance that is short in word count but enormous in implications. [emphasis added]

In general, a TPS performs functions or services necessary—

* For the institution to remain eligible to participate in the Title IV programs;

* To determine a student’s eligibility for Title IV funds;

* To provide Title IV-eligible educational programs;

* To account for Title IV funds;

* To deliver Title IV funds to students; or

* To perform any other aspect of the administration of the Title IV programs or comply with the statutory and regulatory requirements associated with those programs.

That bold bullet “To provide Title IV-eligible educational programs” is the change. Now programs refers not just to financial aid programs (e.g., Stafford loans) but also to educational programs (e.g., online MBA), an entirely different beast. This phrase has never been in previous ED guidance, and with it, ED now includes learning management, instruction, student retention, basically anything that ED wants to consider as necessary for that educational program.

Before, an LMS vendor never dealt with student eligibility for financial aid, never administered or even reported on distribution of funds, or had any part of Title IV programs. But an LMS vendor does help an institution provide educational programs. So do SIS, retention, video conferencing, CRM, and almost any other EdTech vendors. All from that one injected bullet that changed the entire meaning and purpose of TPS.

In the table on Computer Services / Software, the above bullet allows ED to add this entirely new section on what “activities, functions, services, or roles in this column ARE considered an aspect of an institution’s participation in a Title IV program”:

Providing computer services or software in which the provider has access to, or maintains control over, the systems needed to administer any aspect of the Title IV programs, whether through manual or automated processing, including, but not limited to, systems related to financial aid management, recruitment and enrollment, admissions, registration, billing, and learning management.

McCann’s claim that “the new language on computer services that are TPS activities (1st pic) is really just a clarification of a 2016 DCL (2nd pic)” is absurd.

The changes of the new DCL 23-03 represent a difference of kind, not degree.

What If?

What if ED had limited its expansion of TPS guidance to include just direct student recruitment, particularly if a third party was compensated for that recruitment through a tuition revenue sharing agreement? That would have been defensible, whether or not it would be good policy. By recruiting an individual student to a specific program at a specific school, the third party is making a judgment on whether that student qualifies for a loan or grant program and therefore would be likely to enroll. You could qualify for a loan to cover your costs. Please apply here.

Adding student recruitment would have been a difference of degree and defensible.

But ED chose a completely different approach by adding that one bullet, changing the entire scope of TPS guidance and pulling in the majority of the EdTech industry AND course and services-sharing collaborations between institutions.

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