ED Promises to Revise the TPS Expansion in a Blog Post

Previous Dear Colleague Letters remain in effect

Did I just read an attempt to regulate through a blog post? I think I did.

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The US Department of Education (ED) released a blog post today that in effect pulls back the recent Dear Colleague Letter (DCL) guidance that expanded the definition of third-party servicers (TPS). Given the challenge of ED regulating through guidance, it adds another layer of complexity to comment on guidance through a blog post. Nevertheless, this is good news.

There are three key parts of this announcement:

  • ED will revise DCL 23-03 (indirectly saying that they will not rescind it), with the biggest change being the removal of the exclusion of foreign ownership of a TPS.

  • The effective date of the revised DCL 23-03 is no longer September 1st and will now be “at least six months after its publication” of the changes.

  • ED listed several activities in the blog post that it does NOT consider TPS activities:

The Department does not consider contracts involving the following activities 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 identify any other services that fall into this category as we review comments.  

On one hand, all the changes mentioned in the blog post are improvements over the submitted DCL 23-03. On the other hand, this post clearly shows that ED plans to thread the needle and keep as many of the TPS expansions in place that they can get away with. ED is committed to the chosen approach, despite the overwhelming feedback through public comments.

The official DCL has not yet been updated. I will say that if ED thinks a blog post clarification of regulatory guidance is sufficient, rather than rescinding or updating the DCL itself, then we will have another mistake to contend with. I hope I am wrong, but it looks like ED is just winging it with process, trying to buy time until they can revise the DCL but keep as much as possible. This introduction of blog posts into the mix is ridiculous. Institutions and vendors need clarity, not additional contradictory informal statements. Hopefully the actual revision process will go through negotiated rulemaking.

In a premium newsletter on the 2U lawsuit against ED and Secretary Cardona, I wrote:

My advice is to pay attention to this lawsuit, as without court action ED might be inclined to only partially change the DCL 23-03 despite the overwhelming feedback from the higher ed community through public comments.

I cannot say whether the lawsuit directly caused ED to write this blog post, but I will say that the delayed effective date and promises for revision in effect achieves the stay requested in the lawsuit.

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