1. “To Be or Not To Be” A Federal Contractor or a Third Party Servicer
Dino Tsibouris
Attorney
Tsibouris & Associates, LLC

2. Overview Definitions Examples Exclusions Contract terms
Reporting Requirements
Audit Requirements
Penalties

3. TPS Definition
An individual, a state, a private, for-profit or non-profit organization that contracts with an eligible institution to administer, through manual or automated processing, any aspect of the institution’s participation in any Title IV, HEA program

4. TPS Definition
An entity or individual that is not an employee of the institution that performs services and/or functions necessary:
For the institution to remain eligible to participate in the Title IV programs
To determine a student’s eligibility for Title IV funds
To account for Title IV funds
To deliver Title IV funds to students, or
To perform any other aspect of the administration of the Title IV programs regardless of whether the servicer is compensated for the functions or services performed on behalf of the institution

5. TPS Examples Financial aid staffing/Title IV processing
Financial aid management support
Accessing ED systems and/or information downloaded from an ED system to perform any Title IV function or service on behalf of an eligible institution
Evaluating student eligibility and related activities

6. TPS Examples Preparing/submitting applications and reports
Collecting, reviewing, maintaining documents to process Title IV funds 
Preparing consumer information disclosures
Awarding, certifying, disbursing funds
Delivering refunds
Perkins Loan servicing or collections
Cash management services

7. TPS Activities
Interactive financial aid counseling in person/phone/electronically
Default prevention management/outreach

9. TPS Exclusions Entities and individuals who are:
Working on a full-time, part-time, or temporary basis
Performing all duties under the supervision of the institution
Paid directly by the institution
Not employed by or associated with a third-party servicer
Not a third-party servicer for any other institution
Not performing Title IV functions for others

10. TPS Exclusions Entities or individuals:
Hired to review and/or revise policies and procedures to correct deficiencies or make recommendations for improvement
Hired to publish policies, procedures, handbooks, disclosures, etc. via print, audio, video, and/or online
Hired to perform financial and compliance auditing, including preparation of financial statements

11. TPS Exclusions Entities or individuals:
Assisting an institution in completing and/or submitting its response to a program review, audit, or investigation
From local or federal law enforcement agencies, fire departments, and/or other public safety agencies providing campus crime awareness and or drug and alcohol prevention services

12. TPS Exclusions Ability to benefit tests
Financial and compliance auditing
Mailing documents
Records warehousing – Physical storage
Computer services or software (Limited)

13. TPS Exclusions
Financial literacy curriculum or programming, workshops, and/or public awareness campaigns/events open to Title IV and non-Title IV recipients
Note: Exclusion will not apply if an institution requires its students to attend a financial literacy event or complete financial literacy training or counseling to satisfy exit loan counseling or other Title IV requirement

14. TPS Exclusions Cash Management:
Tier 2 arrangements - 34 CFR (f)
Direct ACH transactions between an institution’s treasury account and a student account
Mailing of checks produced by the institution

15. TPS Contract Requirements
Schools must report use of a TPS servicer to ED 
TPS must be in good-standing 
TPS and subcontractors cannot be located outside of the US or be owned/operated by individuals that are not a US citizen, US national, or lawful permanent resident

16. TPS Contract Requirements
Contracts must:
Be in writing
Describe servicer functions clearly
Provide servicer address and phone number
Provide CEO/president name, title, phone number, and address
Identify any subcontractor and clearly describe its functions

17. TPS Contract Requirements
Joint and several liability with institution for violation of Title IV requirements by TPS
TPS compliance with all applicable statutory, regulatory and Title IV requirements
Refer suspicion of fraudulent or criminal conduct to ED Inspector General

18. What to Include In Contracts
Confirm student eligibility and return Title IV funds when a student withdraws if the servicer disburses funds
Return all unexpended Title IV funds upon termination or if TPS ceases to perform any functions prescribed under the contract

19. What to Include In Contracts
Compliance with FERPA Requirements – May disclose personally identifiable information in connection with financial aid that was requested or applied for if disclosure of the information is necessary for specific purposes
FTC Safeguards Rule compliance

20. What to Include In Contracts
TPS must remain compliant with FERPA recordation requirements
For for each request or disclosure, record must:
Include the parties who have requested or received PII from the education records, and
Party’s legitimate interests in requesting or obtaining the information

21. What to Include In Contracts
Clause stating that access to information in Department of Education systems can be only used for the Title IV services performed by the TPS
Return all of Institutions records upon termination

22. What to Include In Contracts
Immediate termination without penalty if TPS:
Limited by ED from administering the institution’s participation in Title IV; or
Debarred, suspended, or voluntarily excluded government-wide from participation in covered transactions

24. TPS Requirements Annual independent audit Protection of PII
Attestation may be submitted instead of audit if not specifically covered in ED’s Guide
Attestation must:
Describe the services provided
Certify the contract includes all required clauses
Affirm that internal controls are sufficient and written procedures exist

25. CNT-Q3:  What must be included in a third-party servicer contract?
CNT-A3: Institutions must ensure that its contracts accurately and specifically detail the functions that the servicer (or its subcontractor(s), if applicable) performs on behalf of the institution, and those functions that are required to be completed by the institution. 

26. CNT-Q7:  Does an institution need to require a third-party servicer to sign a Certification By Lower Tier Contractor form?  
CNT-A7: An institution is required to obtain a signed Certification By Lower Tier Contractor form from all of its third-party servicers, as well as any subcontractors
Attachment to the institution’s PPA

27. TPS Data Form
Must notify ED using eligcert.ed.gov (E-App) within 10 days of the date that it begins, changes, or ends a contract with a TPS and:
Disclose the name, address or contact information for TPS’ primary location or additional location
Provide a copy of the contract and modifications to ED, upon request

28. TPS Data Form

29. OFFICE OF INSPECTOR GENERAL 2016
GUIDE FOR AUDITS OF PROPRIETARY SCHOOLS AND FOR COMPLIANCE ATTESTATION ENGAGEMENTS OF THIRD-PARTY SERVICERS ADMINISTERING TITLE IV PROGRAMS
U.S. DEPARTMENT OF EDUCATION
OFFICE OF INSPECTOR GENERAL
2016

30. School/Servicer Audit Guide
Chapter 1 – General Requirements
Engagement periods, due dates, waivers
Professional standards
Required coverage
Auditor qualifications
Confidentiality
Audit retention requirements
Engagement letter

31. School/Servicer Audit Guide
TPS examination level engagement in accordance with AICPA’s Attestation Standards and GAGAS
Management assertions:
TPS was an eligible servicer
Internal compliance controls

32. School/Servicer Audit Guide
Chapter 4 – School Servicer Compliance Attestation Engagements
Systems and internal control
Institutional eligibility
Reporting
Student eligibility
Disbursements

33. Third-Party Audits/Audit Letters
TPS must submit a compliance audit or audit letter no later than six months after the last day of the TPS fiscal year
FY end 12/31/2017, letter due to ED by 6/30/2018
ED does not endorse or approve a TPS

34. Implementation Tips
Do not limit your consideration of TPS coverage to only those listed
Re-review existing agreements under the new DCL

35. Implementation Tips
Create a list of the entities or individuals providing Title IV-related services
Examples in the DCL include TPS “preparing required consumer information disclosures” in connection with Security Reports, graduation and transfer rates, job placement rates and gainful employment disclosures
Need clarity on what level of participation in the preparation of these reports triggers coverage

36. Parallels to Private Loan Servicing
Obligations attach upon transfer of/access to borrower data to a TPS
Verification of controls
Identify the categories of personal data you collect
Limit access
Gramm Leach Bliley privacy and security
Shared compliance liability

37. Questions & Answers Dino Tsibouris dino@tsibouris.com
Tsibouris & Associates
(614)