Schools sometimes elect to contract out the performance of certain administrative functions. Such an arrangement may be temporary (for example, due to a loss of personnel) or ongoing where outside expertise and resources are deemed more efficient. In any case, the institution retains the responsibility for proper Title IV administration, and is held jointly or severally liable for any compliance exceptions. Regulations identify the functions that may be performed by a third party servicer, and define when performance of certain functions constitute third party status.
Related terms: Administrative Capability; Cash Management; Financial Responsibility of Institutions
Source: Journal of Student Financial Aid
Source: Lumina Foundation