Third Party (Education) Servicers- What are they anyway?

With so many terms and phases being thrown into the world of Financial Aid, there can be many misconceptions. Third-party servicers (TPS) is one of those tossed around terms that can mean many things.

Well, what is a Third-Party Servicer anyway? The Federal Government defines third-party servicers as “an individual or a State, or a private, profit or nonprofit organization that enters into a contract with an eligible institution to administer, through either manual or automated processing, any aspect of the institution’s participating in any Title IV, HEA (Higher Education Act) Program.” (, 2016). For example, TPS can be default companies- debit card companies and Title IV consultants and processors.

In our case, a third-party servicer refers to a small company that helps small, independent, and private post-secondary schools, who do not have their own robust financial aid department to process federal funding applications and order fund disbursements for their students.

Let’s face it, for a prospective student, completing the FAFSA can be hard enough. Now add in trying to figure out how much the student qualifies for against how much they need for the school’s program. This all translates to how much will have to be paid back in the form of student loan debt.  This is just the beginning of the financial aid process too.  Student applications go through a detailed audit in many cases called verification which is usually performed by the school financial aid office or the Third party servicer.

What about the dreaded (third party) Loan Servicers?
To be clear: the third-party “Loan” servicers are NOT the bad guys. Student loan servicers such as Sallie Mae, Freddie Mac, and Great Lakes are the government contracted lending companies that handle the billing and other functions your Federal student loans. They alone are responsible for a student’s repayment and loan consolidations plans. NOTE: A TPS helps may help your school figure out how much your students qualify for, but never make the determination of the loan amount (that’s left up to the government).

The job of a third-party servicer like Financial Aid Services, Inc (FAS) is to assist schools with cumbersome student financial aid-related tasks. Tasks that include accurately processing and verifying the financial aid application, certifying/originating the Federal student loans, disbursing PELL grants and Federal Work study, filing reports, and preparing your school for the Department of Education’s yearly audit. TPS’s also provide critical training for Financial Aid Advisors, Directors, and school owners. For a school to be able to award federal funds to their students, they must be in compliance with the Department of Education and the State Accreditation boards. TPS’s can also provide training to assist in the education of processes, statues, and regulations.

The best part of using a third-party servicer like FAS is leveraging our staff and resources to help your financial aid department succeed.  Sometimes you just do not have enough time or hands. A TPS like FAS is here to expertly streamline the process, giving you more time to focus on your students and your business. It is also helpful to be able call someone to help you with that student file that just has you stumped. A TPS is even better when it is paired with a school management software (SMS) like Genesis- SMSS. The right SMS can make student data tracking easy, often with the ability to automated daily tasks like grading, scheduling, accounting, attendance and Point-of-Sale.

When all is said and done, third-party servicers are the experienced “middle men and women”, bridging the gap between your school, your students, and the Department of education. Our ultimate mission is to help YOU help your students reach their financial and academic goals.


US Legal, Inc. (2016). Third-Party Servicer [Education] Law and Legal Definition. Retrieved September, 14, 2018, from