Dear Colleague Letter Issued Regarding Third-Party Servicer Institutional Requirements and Responsibilities

On January 9, 2015, the U.S. Department of Education issued a Dear Colleague Letter providing guidance to institutions that contract with third-party servicers to administer any aspect of the institution’s participation in Title IV student services programs. Title IV of the Higher Education Act and related regulations require these institutions to report the names of any individual or entity that performs for, or on behalf of, the institution any of the listed Title IV functions. However, the Department has determined that a significant number of institutions have failed to report or update this information or have reported incorrect information due to confusion relating to which entities should be reported as third-party servicers.

The Dear Colleague Letter addresses the following regarding third-servicers:

1. The actions of a third-party servicer which trigger reporting requirements;
2. Institutional requirement for report third-party servicer contracts;
3. The requirements for contacts with third-party servicers;
4. The actions which must be taken by third-party servicers to comply with FERPA requirements; and
5. The obligations of post-secondary educational institutes to comply with Federal Trademark Commission requirements related to handling of secure information by financial institutions.

Additional information from the U.S. Department of Education can be found here: U.S. Dept of Education Third Party Servicer

Patrick R. Sturdy is a partner in our Livonia office where he concentrates his practice on education law, employment and labor law, corporate and business law, and intellectual property. He may be reached at (734) 261-2400 or psturdy@cmda-law.com.