1

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable)
**SUPPORTING STATEMENT FOR PAPERWORK REDUCTION ACT SUBMISSION** 

**A. Justification** 1. Explain the circumstances that make the collection of information necessary . Identify any legal or administrative requirements that necessitate the collection. Attach a hard cop y of the appropriate section of each statute and regulation mandating or authorizing the collection of information , or you may provide a valid URL link or paste the applicable section 1

. Specify the review t ype of the collectio n (new, revision, extension, reinstatement with change, reinstatement without change) . If revised, briefl y specify the changes. If a rulemaking is involved, make note of the sections or changed sections, if applicable. The Department is seeking OMB approval of a Third Party Servicer Data Form to be used to validate the information reported to the Department by higher education institutions regarding third party

servicers that administer one or more aspects of the adminis tration of the Title IV, HEA programs on an institution’s behalf and to collect additional information required for effective oversight of these entities. This is a new request for a collection. Title IV eligible i nstitutions of higher education are requ ired to notify the Secretary of its third party servicer relationships via the institution’s Application for Approval to Participate in the Federal Student Financial Aid Programs (E

- App). Inaddi tion to the name and address of the servicer, the E

- App requires institutions to report the name and phone number of the servicer’s contact person as well as identify the services performed on behalf of the institution in section J of the E

- App
. T he Department has determined through data anal ys is, research, program reviews, and audits that a significant number of higher education institutions have failed to report, update, and/or have incorrectly reported third part y s ervicer information on the E

- App
. As a result, i nformation contained in the Department ’s databases regarding third part y s ervicer contacts, demographics, client lists , and /or the services provided to higher education institutions is inconsistent and inaccurate. Therefore, the Department is unable to rel y on the information reported b y institutions to provide appropriate oversight of the entities performing work on behalf of Title IV eligible institutions. The information collected through the Third Part y Servicer Data form will allow the De partment to identify

institutions of higher education that are failing to report or incorrectly reporting third party servicer information via the E

- App; to monitor and enforce third party servicer compliance with annual audit requirements pursuant to 34 C .F.R. § 668.2 5(c), to identify other persons or organizations that contract with a third part y servicer to assist with an y aspect the administration of a Title IV program on behalf of the third part y s ervicer or its clients, and to effectively coordinate third party

servicer program review assessments.

1 Please limit pasted text to no longer than 3 paragraphs.2

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable) The Higher Education Act of 1965, as amended, allows institutions of higher education to outsource an y aspect of the institution’s participation in any Title IV, HEA program. A third party servicer is defined as any individual or entity

that contracts with or performs work on behalf of an institution to administer, through manual or automated processing, an y aspect of an institution’s responsibilities required under the Title I V, HEA programs. 34 C.F.R. § 668.2 (definition of third part y servicer). Higher education institutions are required to notify the Secretary within 10 day s of the date that: (1) the institution enters into a new contract or significantly modifies an existin g contract with a third part y servicer to administer an y aspect of that program; (2) the institution or a third party servicer terminates a contract for the servicer to administer any aspect of that program; or (3) a third part y servicer that administers any aspec t of the institution’s participation in that program stops providing services for the administration of that program, goes out of business, or files a petition under the Bankruptcy Code. The institution’s notification must include the name and address of the servicer. See 34 C.F.R. § 668.2 5(e)(1). The Title IV, HEA regulations authorize the Department to provide oversight of third party servicers. A third part y s ervicer is subject to the highest standard of care and diligence in administering an y aspe ct of the programs on behalf of the institutions with which the servicer contracts and in accounting to the Secretary and those institutions for any funds administered by the servicer under those programs. 34 C.F.R. § 668 .82( b )(2). When contracting with an institution, a servicer and/or its contractors essentially steps into the shoes of that institution with respect to its compliance with the various requirements relevant to the Title IV, HEA functions it is servicing. A servicer is jointly and severa lly

liable with the institution for any

violation of Title IV, HEA requirements resulting from the functions performed b y the servicer. 34 C.F.R. § 668.25(c)(3). The failure of a third party servicer to administer a Title IV, HEA program, or to account for the funds that the institution or servicer receives under that program, in accordance with the highest standard of care and diligence required of a fiduciary , constitutes ground for the Department to : (1) Seek an emergency

action against the servicer ; (2) Imp ose a fine against the servicer ; or (3) Limit , suspen d , or terminat e the servicer’s eligibility to contract with any

institution to administer an y aspect of the institution’s participation in that program
. 34 C.F.R. § 668. 82(c)(2). A third part y servicer violates it s fiduciary dut y if the servicer uses or contracts in a capacit y that involves any

aspect of the administration of the Title IV, HEA program with any other person, agency , or organization that has been or whose officers or employ ees have been co nvicted of, or pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of Federal, State, or local government funds; or administratively or judiciall y determined to have3

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable) committed fraud or an y other material violation of l aw involving Federal, State, or local government funds. 34 C.F.R. § 668. 82(d) (1)(i)(D).
2. Indicate how, by

whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the inform ation received from the current collection. Third Party Servicers that contract with Title IV eligible institutions to administer any aspect of an institution’s responsibilities required under the Title IV, HEA programs will be required to complete the T hird Part y Servicer Data Form
. Hard copy form s will be sent to Third Party Servicers currentl y listed in Department databases and will also be available to download from the Information for Financial A id P rofessionals (IFAP) web

- site. Servicers will be instructed to submit the form to the Third Party Servicer Oversight Group/Kansas City School Participation Division by

e - mail or regular mail. The Third Part y Servicer Oversight Group will compare the information collected o n the Third Party Servicer Data F orm to the information maintained in the Department’s Postsecondary Education Participants System ( PEPS ) database and update the s ervicer’s contact and demographic information in the sy stem as needed. Higher Education institutions that failed to report or terminate third party s ervicer relationships will be notified to update the E
- App to accuratel y reflect the institution’s relationship with the servicer(s). The Third Party Servicer Oversight Group will enter the information collected on the form into an Access database utilized by

the Third Party

Servicer Oversight Group to track program review and audit activities. The information collected will provide essential data needed to monitor third party s ervicer compliance with annual audit requirements, a s well as more reliable data for risk anal ys is and program reviews. The information collected will be utilized to populate third part y s ervicer information during data migration when the Department’s Integrated Partner Management (IPM) s ystem is implemented. IPM is currentl y scheduled for deplo ym ent the end of 2015 and will replace and/or integrate with a number of Department sy stems currentl y utilized, including PEPS. The Third Part y Servicer Oversight Group will work with the Department’s Policy L iaison and Implementation staff to issue an electronic announcement to the Higher Education community to communicate the requirement for third part y service entities to comply with this request. 3 . Describe whether, and to what extent, the collec tion of information involves the use of automated, electronic, mechanical, or other technological collection techniques or forms of information technology , e.g. permitting electronic submission of responses, and the basis for the decision of adopting this means of collection. Also describe an y consideration given to using technology

to reduce burden. Third Party

Servicers will be required to complete the Third Party Servicer Data Form via ty pe d responses on a PDF fillable form or manuall y (hand written)
. Th ird Part y Servicers will be able to submit the form as an e

- mail attachment or via regular mail
. Once the IPM sy stem is fully4

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable) implemented, third party

s ervicers will be required to enter and/or update the information through the partner portal that re sides in the IP M sy stem. The IP M s ys tem data justification will be submitted through a separate OMB approval process. 4. Describe efforts to identify duplication. Show specificall y wh y an y similar information alread y available cannot be used or modifie d for use for the purposes described in Item 2 above. The Department does not currentl y have a mechanism in place to directly collect the information needed for effective oversight from the entities that partner with eligible higher education institutions to perform Title IV related functions. The minimal amount of third part y servicer information that is collected from higher education institutions through the E

- App process has been determined to be inaccurate, inconsistent, and limited in scope. In addition, the Department has received notification from institutions indicating that some servicers have instructed institutions to not report an entity as a third part y servicer creating confusion in the community regarding who should or should not be rep orted as a third part y servicer. As a result, the Department has been unable to rely on the information reported by higher education institutions to determine servicer compliance with audit requirements and/ or to contact servicers for purposes of scheduli ng program reviews or responding to inquiries. Reliance solel y on data reported from higher education institutions has restricted the Department’s ability to ensure third part y servicers are compl yi ng with the statutes and regulations the Department has been tasked with overseeing. Requiring third p arty s ervicers to complete and submit the information contained on the Third Party Servicer Data form will equip the Department with the information necessary to effectivel y provide required oversight. Appro val of this data collection tool will allow the Department to request and obtain vital information directl y from entities that have been identified as third part y servicers regardless of whether or not the s ervicer has been identified through the E

- App pro cess. 5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden. A small entit y may be (1) a small business which is deemed to be one that is independently owned and operated and th at is not dominant in its field of operation; (2) a small organization that is any not - for

- profit enterprise that is independently owned and operated and is not dominant in its field; or (3) a small government jurisdiction, which is a government of a city , count y, town, township, school district, or special district with a population of less than 50,000. No small businesses are affected b y this information collection. 6. Describe the consequences to Federal program or policy activities if the collection is not conducted or is conducted less frequentl y, as well as an y technical or legal obstacles to reducing burden. As stated previousl y, r eliance solel y on data reported from higher education institutions has restricted the Department’s ability to ensure third party servicers are comply ingwith the statutes and regulations the Department has been tasked with overseeing. The Department must be able5

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable) to easily identify and contact any

entity that is involved in the administration of Title IV programs on behalf of a Title IV eligible institution or the students it serves. The Department must have a method to validate the information reported by higher education institutions and to resolve discrepancies when one or more entities report incorrect or conflicting information
. Absent a data collection tool to request pertinent information from third party servicers that contract with Title IV eligible institutions to perform one or more Title IV related functions, the Department lacks adequate information that is necessary to ensure compliance with the laws, regulations, and policies that govern the programs. Failure to collect this information jeopardiz es the Department’s ability to fulfill its fiduciary

responsibility of safeguard ing taxpay er intere st and ensuring all participants in the sy stem of funding postsecondary education serve the interests of students. 7. Explain any

special circumstances that would cause an information collection to be conducted in a manner:

 requiring respondents to report information to the agency more often than quarterl y;  requiring respondents to prepare a written response to a collection of information in fewer than 30 day s after receipt of it;
 requiring respondents to submit more than an original and two copies o f any document;
 requiring respondents to retain records, other than health, medical, government contract, grant - in

- aid, or tax records for more than three y ears;  in connection with a statistical survey , that is not designed to produce valid and reliable re sults than can be generalized to the universe of study ;  requiring the use of a statistical data classification that has not been reviewed and approved b y OMB;  that includes a pledge of confidentiality that is not supported by

authority established in statute or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or that unnecessaril y i mpedes sharing of data with other agencies for compatible confidential use; or
 requiring respondents to submit proprietary trade secrets, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information ’ s confidentiality to the extent permitted by law. Entities will be required to submit the initial Third Party Servicer Data Form within, but no later than , 30 day s after receiving notification of the requirement. Consistent with the requirements of higher education institutions pursuant to 34 C.F.R. § 668.25(e)(1) , third party servicers will be required to submit revised information within 10 day s of the date:
 The entity

change s its name ;  The entity

changes the address or contact information for a primary location or additional location ;  The entity

adds or terminates a contract with an eligibl e Title IV institution;
 The entity

adds or terminates a contract with a subcontractor or affiliate that performs work on behalf of a third party ; or  The entity

buy s, sells, or merges wi th another third party servicer.6

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable) 8. As applicable, state that the Department has published the 60 and 30 Federal Register notices as required b y 5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions take n by the agency in response to these comments. Specifically address comments received on cost and hour burden. Describe efforts to consult with persons outside the agency to obtain their views on the availability

of data, frequency

of collection, the clarity

of instruction and record keeping, disclosure, or reporting format (if an y), and on the data elements to be recorded, disclosed, or reported. Consultation with representatives of those from whom information is to be obtained or those who must compile records should occur at least once every 3 y ears
– even if the collection of information activity

is the same as in prior periods. There may be ci rcumstances that may preclude consultation in a specific situation. These circumstances should be explained. The Department will publish the applicable 60 and 30 day notices in the Federal Register inviting public comment on the form and the burden asses sment. This is the 60 day notice. 9. Explain any

decision to provide any

pay ment or gift to respondents, other than remuneration of contractors or grantees with meaningful justification
. No gifts or pay

ments will be provided to an y respondents.
10. Describe an y assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy
. If personally

identifiable information (PII) is being collected, a Privacy Act statement should be included on the i nstrument. Please provide a citation for the Sy stems of Record Notice and the date a Privacy I mpact Assessment was completed as indicated on the I C Data Form . A confidentiality statement with a legal citation that authorizes the pledge of confidentiality s hould be provided. 2 If the collection is subject to the Privacy Act, the Privacy

Act statement is deemed sufficient with respect to confidentiality
. If there is no expectation of confidentiality , simply state that the Department make s no pledge about the confidential it y of the data. The Department makes no pledge about the confidential ity of the data. 11. Provide additional justification for an y questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private.

2 Requests for this information are in accordance with the follow ing ED and OMB policies: Privacy Act of 1974, OMB Circular A

- 108

– Privacy Act Implementation

– Guidelines and Responsibilities, OMB Circular A

- 130 Appendix I

– Federal Agency Responsibilities for Maintaining Records About Individuals, OMB M

- 03
- 22

– OMB Guidance for Impl em enting the Privacy Provisions of the E

- Government Act of 2002, OMB M

- 06
- 15

– Safeguarding Personally Identifiable Information, OM : 6
- 104

– Privacy Act of 1974 (Collection, Use and Protection of Personally Identifiable Information)7

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable) The justification should include the reasons wh y t he agency considers the questions necessary , the specific uses to be made of the information, the explanation to be given to persons from whom the information is reque sted, and any steps to be taken to obtain their consent. The Department is not collecting information of a sensitive nature. 12. Provide estimates of the hour burden of the collection of information. The statement should:
 Indicate the number of responde nts by affected public ty

pe (federal government, individuals or households, private sector

– businesses or other for

- profit, private sector

– not - for

- profit institutions, farms, state, local or tribal governments) , frequency of response, annual hour burden , and an explanation of how the burden was estimated, including identification of burden t ype: recordkeeping, reporting or third party disclosure. All narrative should be included in item 12. Unless directed to do so, agencies should not conduct special s urvey s to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to vary widel y because of differences in activity , size, or complexity , show the range of estimated hour burden, and explain the reasons for the variance. Generall y, estimates should not include burden hours for customary and usual business practices.
 If this request for approval covers more than one form, prov ide separate hour burden estimates for each form and aggregate the hour burdens in the ROCI S IC Burden Analy sis Table
. (The table should at minimum include Respondent types, IC activity , Respondent and Responses, Hours/Response, and Total Hours)
 Provide estimates of annualized cost to respondents of the hour burdens for collections of information, identify ing and using appropriate wage rate categories. The cost of contracting out or pay ing outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14. The Department anticipate s an initial response of approximately 600 third party servicers based on the initial mailing. Of the 600 , the Department anticipate s that 400 respondents will be for

profit servicers, 100 respondents will be not - for

- profit servicers, 50 respondents will be State servicers and 50 respondents will be i ndividuals
. The Department estimate s that it will take less than 90 minutes to complete the Third Part y Servicer Data Form and return it to the Department. Therefore, the Department estimate s the total burden for this information collection to be 750 hours. **Type of Respondent Number of Responses**  **Time/Response Total Time**  For
- profit servicer 400 90 minutes 36,000 minutes Not
- for

- profit servicer 100 60 minutes 6,000 minutes State agencies 50 30 minutes 1,500 minutes Individuals 50 30 minutes 1,500 minutes Total for new collection 600 75 minutes (weighted average) 45,000 minutes or 750 hours8

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable)

13. Provide an estimate of the total annual cost burden to respondents or record keepers resulting from the collection of information. (Do not include the cost of any hour burden shown in Items 12 and 14.)

 The cost estimate should be split into two component s: (a) a total capital and start

- up cost component (annualized over its expected useful life); and (b) a total operation and maintenance and purchase of services component. The estimates should take into account costs associated with generating, maintaini ng, and disclosing or providing the information. Include descriptions of methods used to estimate major cost factors including s ys tem and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over whi ch costs will be incurred. Capital and start - up costs include, among other items, preparations for collecting information such as purchasing computers and software; monitoring, sampling, drilling and testing equipment; and acquiring and maintaining record storage facilities.
 If cost estimates are expected to vary widel y, agencies should present ranges of cost burdens and explain the reasons for the variance. The cost of contracting out information collection services should be a part of this cost burden e stimate. In developing cost burden estimates, agencies may consult with a sample of respondents (fewer than 10), utilize the 60

- day

pre - OMB submission public comment process and use existing economic or regulatory

impact anal ys is associated with the rulem aking containing the information collection, as appropriate.
 Generally , estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not ass ociated with the information collection, (3) for reasons other than to provide information or keep records for the government or (4) as part of customary and usual business or private practices. Also, these estimates should not include the hourly costs (i. e., the monetization of the hours) captured above in Item 12 Total Annualized Capital/Startup Cost : Total Annual Costs (O&M) :

____________________ Total Annualized Costs Requested : There are no additional costs. There are no s ys tems requirements to respondents. 14. Provide estimates of annualized cost to the Federal government. Also, provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing, and support staff), and any other expense that would not have been incurred without this collection of information. Agencies also may aggregate cost esti mates from Items 12, 13, and 14 in a single table. There are no additional costs to the Federal government
.9

OMB Number: 1845
- NEW1 Revised: 08 / 20 / 2014 RIN Number: XXXX

- XXXX (if applicable) 15. Explain the reasons for an y program changes or adjustments. Generally, adjustments in burden result from re

- estimating burden and/or from economic phenomenon outside of an agency ’ s control (e.g., correcting a burden estimate or an organic increase in the size of the reporting universe). Program changes result from a deliberate action that materiall y changes a collection of information and ge nerally are result of new statute or an agency action (e.g., changing a form, revising regulations, redefining the respondent universe, etc.). Burden changes should be disaggregated by t ype of change (i.e., adjustment, program change due to new statute, an d/or program change due to agency discretion) , ty

pe of collection (new, revision, extension, reinstatement with change, reinstatement without change) and include totals for changes in burden hours , responses and cost s (if applicable)
. This is a request fo r a program change due to agency discretion. This new information collection will provide necessary

information on third part y servicers who provide T itle IV, HEA services to eligible institutions and allow the Department to maintain oversight of the servicers and protect the interests of eligible institutions, eligible students and taxpay ers. 16. For collections of information whose results will be published, outline plans for tabulation and publication. Address any complex analy

tical techniques that will be used. Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions. The results of this collection will not be published. 17
. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate. The Department is not seeking this approval.
18. Explain each exception to the certification statement identified in the Certification of Paperwork Reduction Act. The Department is not requesting an y exceptions to the “Certification for Paperwork Reduction Act Submissions” of OMB Form 83

- 1.