New US Department of Education guidance alarming for ed-tech and recruitment providers

The US Department of Education has moved to substantially increase its regulatory oversight of third-party service providers. While its surprising announcement appears to be primarily targeted at contracts with online program managers (OPMs), the sweeping nature of the new Department of Education rules has triggered fresh concerns for other ed-tech vendors as well as international educators.

In a “Dear Colleague” letter (DCL) dated 15 February 2023, the Department of Education essentially establishes its expanded oversight authority for any third-party service provider (TPS) relationships that a US institution may have. It also obliges US institutions to formally report those relationships to the department.

“[The Department] has reviewed numerous contractual arrangements between institutions and outside entities. These reviews have confirmed that most activities and functions performed by outside entities on behalf of an institution are intrinsically intertwined with the institution’s administration of the Title IV programs and thus the entities performing such activities are appropriately subject to TPS requirements,” explains the 15 February letter. “In particular, the Department is revising its guidance concerning the functions of student recruiting and retention, the provision of software products and services involving Title IV administration activities, and the provision of educational content and instruction. The Department is aware that a large and growing industry has developed to provide one or more of these services as a means of transitioning academic programs into a distance education format and expanding enrolment. Companies providing such services are sometimes referred to as ‘online program managers,’ or OPMs.”

We should note that the term “Title IV programs” refers to federal financial aid for post-secondary students in the US, a program which is almost entirely confined to US citizens.

While the letter specifically refers to OPMs as an area of focus, it goes on to cast a very broad net of recruitment and program delivery activities which has in turn triggered considerable confusion about the types of TPS relationships the Department of Education now intends to scrutinize.

For example, the letter specifically indicates that “Recruitment- and Application-Related Activities” are within in its oversight scope, including:

• “Interacting with prospective students for the purposes of recruiting or securing enrollment. This includes, but is not limited to, providing prospective students with information on educational programs, application and document requirements, deadlines, and the enrollment process.”
• “Assisting students with the completion of application and enrollment processes. This includes offering admission and enrollment counseling.”