Docket: ED-2014-ICCD-0130

Third Party Servicer Data Collection

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Comments Received From: 

National Council of Higher Education Resources (NCHER)

American Student Assistance (ASA)

Donald Grybas

Sherwin Hibbets, FAME

Comment Submitted By Department’s Response

(1) Both NCHER and ASA support the 

appropriate use of the proposed form; 

however, both continue to have serious 

concerns that the form includes certain 

content that does not comport with the 

requirements of the FFELP regulatory

schema and the Department’s 

longstanding interpretation of a “thirdparty servicer.” Both suggest that the 

latest draft includes an expanded list of 

services that exceeds current 

regulatory authority.

ASA expressed confusion as to 

whether the expanded list of activities 

under item number 16 should be 

considered as a “de facto expansion of

past regulatory guidance on required 

activities for Title IV schools and the 

understood definition of a third party 

servicer to these schools.”

NCHER and ASA recommended that 

the Department not proceed with the 

revised form until the pending Dear 

Colleague guidance has been 

published along with the updated 

compliance audit guide to ensure there 

are no unintended negative 

consequences to schools – and the 

students and borrowers they serve who 

may wish to obtain supplemental 

student support services, including but 

not limited to counseling, delinquency, 

and default aversion, and that all 

documents promulgated by the 

Department as guidance or authority

are in alignment.

NCHER

ASA

Comment 1: As discussed in detail in the 

Department’s response to the comments 

submitted in November 2014, the 

Department disagrees with commenters’

assessment that entities that provide default 

management related services (such as 

counseling, delinquency, and default 

aversion) are not considered a “third-party 

servicer” under the current regulatory

definition of the term. 

A third-party servicer is defined as, 

“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.”

While the definition goes on to outline a 

number of functions that the Department 

considers as administration of an aspect 

of the institution’s participation in the 

Title IV programs, the regulation clearly 

indicates that the list is not exhaustive 

and does not exclude functions or 

services (such as counseling, 

delinquency, and default aversion) 

implemented by an institution to lower 

or maintain loan cohort default rates. 

See 34 C.F.R. § 668.2(b).

In regards to commenters’ concern that “the 

form includes certain content that does not 

comport with the requirements of the 

FFELP regulatory schema”, the Department 
Docket: ED-2014-ICCD-0130

Third Party Servicer Data Collection

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wishes to clarify that the only entities or 

individuals that will be required to complete 

the proposed form are those that enter into 

an agreement or contract with an eligible 

institution of higher education to 

administer/perform a Title IV related 

function on behalf of that institution. 

Entities that perform Title IV related 

services such as default aversion on behalf 

of the Department as a Direct Loan Servicer, 

or to perform required functions under the 

prior FFEL provisions, are not required to 

complete this form unless the entity or 

individual also contracts with an eligible 

institution to perform Title IV related 

services on behalf of the institution. 

Entity/individuals required to complete this 

form will only indicate the 

functions/services in item number 16 of the 

form that are performed on behalf of the 

institutions of higher education that the 

entity/individual enters into a contract or 

agreement with.

As noted in the Department’s response to 

the comments submitted in November 2014, 

the Department reviewed each question on 

the form and updated information to address

the concerns noted by commenters and to 

provide additional clarity. These revisions 

included expanding the current list of 

activities under item number 16 to provide 

additional clarification and examples of 

Title IV related functions that third party

servicers are performing on behalf of 

eligible institutions of higher education. It 

is important to note that more than 593 

eligible institutions of higher education have 

reported entities known to perform default 

management functions to the Department as 

a third party servicer on the institution’s 

Application for Approval to Participate in 

the Federal Student Financial Aid Programs

(E-App).

The pending Dear Colleague guidance 

referenced by commenters was published on 
Docket: ED-2014-ICCD-0130

Third Party Servicer Data Collection

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January 09, 2015. The proposed form is in 

alignment with this guidance.

The Department rejects commenters’

recommendation that the Department not 

proceed with the revised form until the 

compliance audit guide is updated. The last 

published version of the compliance audit 

guide was January 2000. Page I-2 of the 

guide clearly states that the “guide is not 

intended to be a complete manual of 

procedures, nor is it intended to supplant the 

IPA's judgment of the work required. 

Suggested procedures described may not 

cover all circumstances or conditions 

encountered at a particular institution. The 

IPA should use professional judgment and 

due care to tailor the procedures so that the 

financial statement audit and compliance 

attestation engagement objectives are 

achieved.” 

Finally, the Department is unclear what if 

any “unintended negative consequences to 

schools – and/or the students and borrowers 

they serve” could exist by requiring 

entities/individuals that perform Title IV 

related services on behalf of institutions of 

education to complete the proposed form. 

As discussed in the Supporting Statement 

For Paperwork Reduction Act Submission, 

the Department has determined through data 

analysis, research, program reviews, and 

audits that a significant number of higher 

education institutions have failed to report, 

update, and/or have incorrectly reported

third party servicer information on the EApp. As a result, information contained in 

the Department’s databases regarding third 

party servicer contacts, demographics, client 

lists, and/or the services provided to higher 

education institutions is inconsistent and 

inaccurate. 

The information collected through the 

proposed form will allow the Department to 

correct inaccurate information maintained in 
Docket: ED-2014-ICCD-0130

Third Party Servicer Data Collection

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the Department’s database regarding entities 

and individuals that perform Title IV related 

services to institutions of higher education.

The proposed form does not prohibit or 

restrict an entity or individual from entering 

into a contract or agreement with an 

institution of higher education from 

performing any function, “including but not 

limited to counseling, delinquency, and 

default aversion”.

Revisions made to proposed form based on 

comments submitted: None

(2) The commenter described the complex 

nature and diversity of the services 

performed by organizations that assist 

institutions with its responsibilities of 

administering federal student financial 

aid programs. The commenter 

indicates that while administrative 

oversight is necessary to ensure that 

federal aid programs are being 

administered in accordance with the 

provisions of Departmental regulations 

and policy, such oversight is already in 

place with current annual audit 

requirements and with examinations 

conducted by Departmental staff 

through periodic program reviews.

The commenter indicates that 

initiation of a new process of 

collecting data, with the ultimate goal 

of being effective oversight of third 

party service organizations, will result 

in an inequitable treatment of colleges 

and universities regarding 

administrative compliance.

Commenter states that such additional 

oversight and potential increased 

regulatory burden regarding third party

servicers would result in a greater 

degree of oversight and a higher 

standard of care being applied to 

Don Grybas As discussed above and in the Supporting 

Statement For Paperwork Reduction Act 

Submission, the Department has determined 

through data analysis, research, program 

reviews, and audits that a significant number 

of higher education institutions have failed 

to report, update, and/or have incorrectly 

reported third party servicer information on 

the E-App. As a result, information 

contained in the Department’s databases 

regarding third party servicer contacts, 

demographics, client lists, and/or the 

services provided to higher education 

institutions is inconsistent and inaccurate. 

The information collected through the 

proposed form will allow the Department to 

correct inaccurate information maintained in 

the Department’s database regarding entities 

and individuals that perform Title IV related 

services to institutions of higher education. 

The additional information collected on the 

proposed form will ensure the Department 

has the appropriate contact information to 

correspond with the owners and/or officers 

of the entities/individuals performing work 

on behalf of eligible higher education 

institutions, as well as to ensure the 

Department properly identifies compliance 

audits that are submitted under a legal name 

or doing business as name or for a location 
Docket: ED-2014-ICCD-0130

Third Party Servicer Data Collection

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institutions who elect to employ a third 

party service agency as opposed to 

those who handle its administration 

through on-campus employees.

The commenter believes “the pursuit 

of data collection leading to additional 

oversight upon third party servicers is 

selective, inequitable, and redundant 

and would not improve the already 

high quality of the services already 

provided to institutions by such 

agencies.”

that differs from the information reported by 

higher education institutions.

The Title IV regulations authorize the 

Department to provide oversight of higher 

education institutions and the third party 

servicers performing Title IV related 

functions on behalf of the institutions. The 

information the Department is seeking to 

collect through the proposed form is 

required to validate and correct the 

information reported to the Department by

higher education institutions. This 

information is necessary for effective 

oversight.

Revisions made to proposed form based on 

comments submitted: None

(3) Commenter supports the Department’s 

appropriate use of data collection for 

authorized oversight purposes in a way

that does not jeopardize private 

entities’ proprietary information and 

business continuity.

Commenter suggests the Department 

consider distinguishing between 

Federal Perkins Loan Servicer and 

Federal Perkins Loan Collection 

Agency for the options listed under 

question 16 of the proposed form to 

simplify management of the data by

the Department.

Commenter expressed concern 

regarding the Department’s 

requirement that the submitting entity

attach a copy of the entity’s 

organizational chart with employee 

names and titles. Commenter 

indicates that this requirement would 

be excessive for entities that employee 

hundreds of individuals. Commenter 

also expressed concern about the 

confidentiality of the data since the 

Department makes no pledge about the 

Sherwin Hibbets, 

FAME

The Department agrees with the 

commenter’s suggestion and revised the 

options listed under question 16 of the form 

to distinguish between Federal Perkins Loan 

Servicer and Federal Perkins Loan 

Collection Agency.

The Department revised the requirement 

that the submitting entity attach a copy of 

the entity’s organization chart with names 

and titles of all employees to reduce the 

administrative burden of those entities that 

employee large numbers of individuals. The 

revised form now requires the submitting 

entity to attach a copy of the entity’s 

organization chart that provides the name 

and title of those individuals that serve in a 

management/supervisory role. The 

Department does not agree that the 

collection of employee names and titles 

jeopardizes an entity’s proprietary

information or business continuity.

The Department revised the proposed form 

to include a footnote that defines a 

company/organization as “an individual or a 

State, or a private, profit, or non-profit 

organization that enters into a contract or 
Docket: ED-2014-ICCD-0130

Third Party Servicer Data Collection

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confidentiality of the data in its 

response to question 10 of the 

Supporting Statement For Paperwork 

Reduction Act Submission. 

Commenter indicates it is a “breach of 

trust if the Department can collect 

competitive information about 

executive and management names and 

responsibilities and be able to share 

that information with educational 

institutions and other Third Party 

Servicers and perhaps other types of 

entities. 

Commenter suggests using an 

organizational chart without the names 

of employees. Commenter points out 

that the proposed form seeks to collect 

numerous contacts per entity.

Commenter also expressed concern 

regarding the descriptors used to 

identify a Third Party Servicer on the 

proposed form. Commenter

recommended that all questions on the 

proposed form should be modified to 

“Entity/Person” to prevent individuals 

such as consultants operating as sole 

proprietors from legally avoiding 

completion of the form if the form 

does not address the person(s) 

operating solely as individuals, and not 

as corporations or other forms of legal 

entities.

agreement with an eligible institution to 

administer any aspect of the institution’s 

participation in the Title IV programs to 

address the commenter’s concern that some 

individuals may attempt to legally avoid 

completing the form based on the descriptor 

used to define an entity. 

Revisions made to proposed form based on 

comments submitted: 

1) Added additional check box to 

distinguish between Federal Perkins Loan 

Servicer and Federal Perkins Loan 

Collection Agency

2) Added a footnote to define the descriptor 

“company/organization”.

3) Revised the requirement that the 

submitting entity “attach a copy of the 

entity’s organization chart with names and 

titles of all employees” to “attach a copy of 

the entity’s organization chart that provides 

the name and title of those individuals that 

serve in a management/supervisory role”.