The U.S. Department of Education on Friday issued guidance to clarify colleges’ responsibilities for reporting deals with student-aid contractors, saying that a “significant number” of institutions had failed to report those relationships.
Colleges pay the contractors to perform such tasks as processing student-aid applications and disbursing aid. They are required to notify the department of their servicing contracts, but the department said last month that many colleges were not doing so. The department said it would conduct a survey in an effort to uncover deals that were not being reported.
“We are aware that some servicers have told institutions not to report them as third-party servicers, creating confusion regarding what entities should be reported as third-party servicers,” the department said in a “Dear Colleague” letter issued on Friday. The department’s guidance seeks to clarify institutional requirements for reporting servicer contracts.