These services typically involve financial data processing and transmission services, servicing institutional and Federal student loans, collection of defaulted Federal Perkins, other student loans and student debts owed to the institution. Institutions and their servicing agents are also required under the Higher Education Act to report to national credit reporting agencies information regarding Federal Perkins loan defaults. However, in these instances, the institution of higher education is simply outsourcing part of its student financial aid functions to the commercial partner, generally to achieve cost savings. We believe that the final rule should clarify in an example that student financial aid activities are not covered. Application of these requirements to college and universities would duplicate, overlap, and, in some cases, conflict with the other current Federal requirements.
Many institutions utilize commercial partners.
The third-party receiving this information may only use the information for these purposes. If the third party violates this requirement, the institution of higher education is barred from disclosing information to that third party for at least five years. In addition to these general comments, we are also providing the following comments on how specific sections of the proposed rule relate to these general concerns. Part 313.1 Purpose and scope. However, we do not believe that the rule applies to these organizations in their role as third-party servicers and contractors to institutions of higher education in their administration of the student financial assistance programs.