The U.S. Department of Education (ED) today made two announcements aimed at increasing oversight for Online Program Managers (OPMs) and those entities that engage directly with students when federal Title IV funding is involved.
ED will hold a series of virtual listening sessions to explore the impact of the 2011 Dear Colleague letter, which created the bundled services exception—allowing for revenue share agreements between Title IV-eligible postsecondary education institutions and third parties. The move comes in response to increased pressure, including from Senate Democrats, for ED to regulate OPMs. The move comes after a 2022 GAO report that called for increased compliance requirements for OPMs from ED.
ED also announced a new Dear Colleague Letter (DCL) that significantly expands the definition of Third-Party Servicer (TPS), to now include OPMs as well as many other entities in the student success space. TPS arrangements must be reported by institutions of higher education and are subject to oversight by ED, with TPSs required to submit an annual compliance audit to the agency. While ED does not have oversight into the approval of new relationships, they can limit, suspend, or terminate a TPS for failing to comply with the regulations.
The new definition of TPS is wide-ranging, including “agreements to administer ‘any aspect’ of an institution’s participation in the Title IV programs.” A list of examples is available within the guidance, but currently includes a wide variety of entities that partner with institutions to interact with learners for recruitment and retention purposes. For example, the guidance notes that a TPS would be defined as “conducting activities designed to keep an individual enrolled at an institution eligible for Title IV aid,” further clarifying this could include outreach to learners around their “attendance or academic engagement.” It is our initial read that the expanded definition may now include a large number of entities (both for- and non-profit) that contract with institutions, many of which have not been historically classified as an OPM or engage in revenue-sharing agreements.
The new guidance states that institutions must report their TPS arrangements under the new definition by May 1, 2023 and servicers must submit a data form to ED along the same timeline. The guidance does not change the scope of the current incentive compensation bundled services guidelines. The new guidance comes as ED is launching a new Negotiated Rulemaking process this spring, which will include rules aimed at Third Party Servicers. Those pending rules could seek to further regulate these types of contracts. Our team will continue to provide updates and analysis as it becomes available.
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