30D Supporting Statement 1845-0130 Third Party Servicer Data Form

Tracking and OMB Number: 1845-0130 Revised: 12/18/2017

RIN Number: XXXX-XXXX (if applicable)

SUPPORTING STATEMENT

FOR PAPERWORK REDUCTION ACT SUBMISSION

Third Party Servicer Data Collection

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 copy 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 section¹. Specify the review type of the collection (new, revision, extension, reinstatement with change, reinstatement without change). If revised, briefly specify the changes. If a rulemaking is involved, make note of the sections or changed sections, if applicable.

The Department is seeking an extension of the OMB approval of a Third Party Servicer Data Form. This form collects information from third party servicers. This form is used to validate the information reported to the Department by higher education institutions about the third party servicers that administer one or more aspects of the administration of the Title IV, HEA programs on an institution’s behalf. This form also collects additional information required for effective oversight of these entities.

Title IV eligible institutions of higher education are required to notify the Secretary of their third party servicer relationships. In addition to the name and address of the servicer, institutions are required 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. The Department determined through data analysis, research, program reviews, and audits that a significant number of higher education institutions failed to report, update, and/or incorrectly reported third party servicer information. As a result, information contained in the Department’s databases regarding third party servicer contacts, demographics, client lists, and/or the services provided to higher education institutions was inconsistent and inaccurate. Therefore, the Department was unable to rely on the information reported by institutions to provide appropriate oversight of the entities performing work on behalf of Title IV eligible institutions.

The information collected through the Third Party Servicer Data form allows the Department to identify institutions of higher education that are failing to report or incorrectly reporting third party servicer information, to monitor and enforce third party servicer compliance with annual audit requirements pursuant to 34 C.F.R. § 668.25(c), to identify other persons or organizations that contract with a third party servicer to assist with any aspect of the administration of a Title IV program on behalf of the third party servicer or its clients, and to effectively coordinate third party servicer program review assessments.

The Higher Education Act of 1965, as amended, allows institutions of higher education to outsource any 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, any aspect of an institution’s responsibilities required under the Title IV, HEA programs. 34 C.F.R. § 668.2 (definition of third party servicer).

Higher education institutions are required to notify the Secretary within 10 days of the date that:

1. the institution enters into a new contract or significantly modifies an existing contract with a third party servicer to administer any 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 party servicer that administers any aspect 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. § 668.25(e)(1).

The Title IV, HEA regulations authorize the Department to provide oversight of third party servicers. A third party servicer is subject to the highest standard of care and diligence in administering any aspect 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 step 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 severally liable with the institution for any violation of Title IV, HEA requirements resulting from the functions performed by 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. Impose a fine against the servicer; or

3. Limit, suspend, or terminate the servicer’s eligibility to contract with any institution to administer any aspect of the institution’s participation in that program.

34 C.F.R. § 668.82(c)(2).

A third party servicer violates its fiduciary duty if the servicer uses or contracts in a capacity 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 employees have been convicted 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 judicially determined to have committed fraud or any other material violation of law 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 information 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 are required to complete the Third Party Servicer Data Form. Forms are available to download from the Information for Financial Aid Professionals (IFAP) web-site. Servicers are instructed to submit the form to the Third Party Servicer Oversight Group/Kansas City School Participation Division by e-mail or regular mail. A fillable PDF version of the form is also available on the IFAP web-site. Servicers complete the form and click the submit icon located at the bottom of the form. The information on the form is automatically e-mailed to the Third Party Servicer Oversight Group.

The Third Party Servicer Oversight Group compares the information collected on the Third Party Servicer Data Form to the information reported by higher education institutions that is maintained in Department systems. The Third Party Servicer Oversight Group follows up with third party servicers and higher education institutions to resolve discrepancies and updates the information in the Department’s system(s) as needed. Higher Education institutions that fail to report or terminate third party servicer relationships are notified to update the appropriate system(s) to accurately reflect the institution’s relationship with the servicer(s). The Third Party Servicer Oversight Group enters 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 provides essential data needed to monitor third party servicer compliance with annual audit requirements, as well as more reliable data for risk analysis and program reviews.

The information collected will be utilized to populate third party servicer information during data migration when the Department’s Integrated Partner Management (IPM) system is implemented. IPM is currently scheduled for deployment by the end of 2017 and will replace and/or integrate with a number of Department systems.

The Third Party Servicer Oversight Group in coordination with the Department’s Policy Liaison and Implementation staff issued an electronic announcement to the Higher Education community on February 12, 2015 to communicate the requirement for third party entities to comply with this request. Information was also referenced in Dear Colleague Letter GEN-16-15 issued on August 16, 2016.

3. Describe whether, and to what extent, the collection 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 any consideration given to using technology to reduce burden.

Respondents may submit the form as a fillable PDF, as an e-mail attachment, or print and submit the form via standard mail delivery. Once the IPM system is fully implemented, respondents will be able to enter and/or update the information through the partner portal that will reside within the IPM system.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.

The Department previously did not have a mechanism in place to collect the information needed for effective oversight directly from the entities that partner with eligible higher education institutions to perform Title IV related functions. The minimal amount of third party servicer information that was collected from higher education institutions prior to the development of this form was determined to be inaccurate, inconsistent, and limited in scope.

In addition, prior to the development of this form, the Department had received notification from higher education institutions indicating that some servicers had incorrectly instructed institutions to not report an entity as a third party servicer creating confusion in the community regarding who should or should not be reported as a third party servicer. As a result, the Department had 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 scheduling program reviews or responding to inquiries.

Reliance solely on data reported from higher education institutions restricted the Department’s ability to ensure third party servicers were complying with the statutes and regulations the Department has been tasked with overseeing. Requiring third party servicers to complete and submit the information contained on the Third Party Servicer Data form equips the Department with the information necessary to effectively provide required oversight. Approval of this data collection tool will continue to allow the Department to request and obtain vital information directly from entities that have been identified as third party servicers regardless of whether or not the servicer has been reported through the notification process utilized by institutions of higher education.

5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden. A small entity may be (1) a small business which is deemed to be one that is independently owned and operated and that 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, county, town, township, school district, or special district with a population of less than 50,000.

No small businesses are affected by this information collection.

6. Describe the consequences to Federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.

As stated previously, reliance solely on data reported from higher education institutions restricted the Department’s ability to ensure third party servicers are complying with the statutes and regulations the Department has been tasked with overseeing. The Department must be able 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 developed this 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 this 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 Title IV programs. Failure to collect this information jeopardizes the Department’s ability to fulfill its fiduciary responsibility of safeguarding taxpayer interest and ensuring all participants in the system 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 quarterly;

• requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it;

• requiring respondents to submit more than an original and two copies of any document;

• requiring respondents to retain records, other than health, medical, government contract, grant-in-aid, or tax records for more than three years;

• in connection with a statistical survey, that is not designed to produce valid and reliable results than can be generalized to the universe of study;

• requiring the use of a statistical data classification that has not been reviewed and approved by 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 unnecessarily impedes 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 are required to submit the initial Third Party Servicer Data Form within, but no later than, 30 days 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 are required to submit revised information within 10 days of the date:

• The entity changes 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 eligible Title IV institution; or

• The entity buys, sells, or merges with another third party servicer.

8. As applicable, state that the Department has published the 60 and 30 Federal Register notices as required by 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 taken 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 any), 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 years – even if the collection of information activity is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained.

The Department will publish a 30-day notice inviting public comment on the burden identified in this statement in the Federal Register. No comments were received during the 60-day public comment period.

9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees with meaningful justification.

No gifts or payments will be provided to any respondents.

10. Describe any 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 instrument. Please provide a citation for the Systems of Record Notice and the date a Privacy Impact Assessment was completed as indicated on the IC Data Form. A confidentiality statement with a legal citation that authorizes the pledge of confidentiality should 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 makes no pledge about the confidentiality of the data.

The Department makes no pledge about the confidentiality of the data.

11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private. The justification should include the reasons why the 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 requested, 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 respondents by affected public type (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 type: recordkeeping, reporting or third party disclosure. All narrative should be included in item 12. Unless directed to do so, agencies should not conduct special surveys 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 widely because of differences in activity, size, or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.

• If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in the ROCIS IC Burden Analysis 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, identifying and using appropriate wage rate categories. The cost of contracting out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14.

The Department has received 187 Third Party Servicer Data Forms. Of the 187, 142 are for-profit servicers, 17 are non-for-profit servicers, 7 are State servicers, and 21 are individuals. Of these 187 Third Party Servicer Data Forms, the Department estimates that 40% or 75 Third Party Servicers will need to provide updates to the form taking 15 minutes for each response for a total of 19 additional burden hours (75 respondents x 15minutes/ 60 minutes = 19 hours) assigned to OMB Control Number 1845-0130.

Type of Respondent	Number of Responses	Time/Response	Total Time
For-profit servicer	57	15 minutes	14 hours
Not-for-profit servicer	7	15 minutes	2 hours
State agencies	3	15 minutes	1 hour
Individuals	8	15 minutes	2 hours
Sub Total for Updates	75		19 hours

Additionally, the Department anticipates receiving 250 new Third Party Servicer Data Forms. Of the 250, the Department anticipates that 180 respondents will be for-profit servicers, 20 respondents will be not-for-profit servicers, 10 respondents will be State servicers and 40 respondents will be individuals. The Department estimates the total burden for these new 250 Third Party Servicers to provide the completed form will add 315 additional burden hours to OMB Control Number 1845-0130.

Type of Respondent	Number of Responses	Time/Response	Total Time
For-profit servicer	180	90 minutes	270 hours
Not-for-profit servicer	20	60 minutes	20 hours
State agencies	10	30 minutes	5 hours
Individuals	40	30 minutes	20 hours
Sub Total for new submissions	250		315 hours

Total for renewal of OMB Control Number 1845-0130

Type of Respondent	Number of Responses	Total Time
For-profit servicer	237	284 hours
Not-for-profit servicer	27	22 hours
State agencies	13	6 hours
Individuals	48	22 hours
Total	325	334 hours

Previous burden assessment totals

Type of Respondent	Number of Responses	Total Time
For-profit servicer	400	600 hours
Not-for-profit servicer	100	100 hours
State agencies	50	25 hour
Individuals	50	25 hours
Total	600	750 hours

Difference

Type of Respondent	Number of Responses	Total Time
For-profit servicer	-163	-316 hours
Not-for-profit servicer	-73	-78 hours
State agencies	-37	-19 hours
Individuals	-2	-3 hours
Total	-275	-416 hours

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 components: (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, maintaining, and disclosing or providing the information. Include descriptions of methods used to estimate major cost factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which 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 widely, 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 estimate. 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 analysis associated with the rulemaking 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 associated 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 systems 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 estimates from Items 12, 13, and 14 in a single table.

There are no additional costs to the Federal government.

15. Explain the reasons for any 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 materially changes a collection of information and generally 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 type of change (i.e., adjustment, program change due to new statute, and/or program change due to agency discretion), type of collection (new, revision, extension, reinstatement with change, reinstatement without change) and include totals for changes in burden hours, responses and costs (if applicable).

This is a request for the extension of information collection 1845-0130. This information collection will continue to provide necessary information on third party servicers who provide Title 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 taxpayers. There has been no change to the supporting regulatory language. We have reevaluated the usage of the form and there is a resulting decrease in the number of respondents and burden hours. We now anticipate 325 respondents requiring 334 hours to complete or update the Third Party Servicer Data Forms. This is a decrease from the previous filing of 275 respondents and 416 burden hours.

16. For collections of information whose results will be published, outline plans for tabulation and publication. Address any complex analytical 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 any exceptions to the “Certification for Paperwork Reduction Act Submissions” of OMB Form 83-1.

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

2 Requests for this information are in accordance with the following 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 Implementing 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)

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