Third-Party Servicer (TPS) Position

INTERNAL DRAFT — no counsel engaged. Reflects the current rule state as verified 2026-06-26 and is not a legal opinion. The TPS landscape has moved before; re-verify against current ED sources before relying. A binding servicer-status determination is a [LEGAL PLACEHOLDER], finalize with an attorney before signing any servicer attestation. The factual position below can be shared with a pilot partner as Eli's stated posture.

Last reviewed: 2026-06-26.

Position

TPS status is scope-dependent and has not been cleared by counsel. Eli is designed for institution control, human review, and staff approval, but those controls do not by themselves decide whether a contracted service administers an aspect of Title IV participation. Operational SOR, R2T4, SAP, and GE/FVT services may fall within TPS scope. The institution and qualified counsel must classify the specific statement of work and satisfy any resulting contract, reporting, liability, audit, and oversight duties.

Why — three reasons

1. The 2023 expansion was formally rescinded

In February 2023, ED issued Dear Colleague Letter GEN-23-03, proposing to sharply expand the TPS definition (to sweep in more software vendors, recruiting, and other activities). After significant industry pushback it was narrowed, then formally rescinded in November 2024. The operative definition today is the long-standing one at 34 CFR 668.2 (statutory basis 20 U.S.C. § 1088(c)).

ED has reserved the option to revisit the TPS definition through future negotiated rulemaking. This position is current as of 2026-06-26 and should be re-checked at send time.

2. Software provision can be excluded, but operational services require analysis

A TPS is an entity that contracts with a Title IV institution to administer, through manual or automated processing, an aspect of the institution's Title IV participation. A software-only arrangement may be treated differently from a managed or operational service, so the analysis must follow the actual work Eli performs and the authority it exercises—not a product label.

3. Eli's design keeps the institution as the actor

The decisive line is whether the vendor administers a function versus supports the school's own staff who administer it. Eli's controls reduce risk and preserve institution oversight, but do not predetermine the legal classification:

• The institution decides every determination. Every category that constitutes a real Title IV judgment (identity/V4-V5, PJ, SAP, R2T4, conflicts, non-filers, low-confidence) routes to a human (lib/reconciliation/decision.ts, hardOverrides()).
• The AI cannot decide outcomes. The deterministic engine owns the determination; any model-proposed decision is ignored (lib/agent/finalize.ts).
• Federal writes can require a school-side second reviewer. Segregation of duties keeps a human in control of any transmission (lib/server-actions.ts, supervisorSignOffFps()).
• No live SIS or Department-system connector is in the current pilot boundary, and Eli does not take custody of Title IV funds. Banner/PowerFAIDS screens and connector interfaces are demonstrations or specifications; the evaluation uses synthetic fixtures or approved file exchange. Any operational connector is a new function requiring design-partner engineering, security approval, and TPS classification.

Where the line could flip (honest caveats)

The software-provision exclusion is fact-specific. The risk shifts toward in-TPS if Eli were to: make or finalize eligibility/verification determinations on the school's behalf without a human; transmit ISIR corrections into the federal system as the acting party in place of the school; or operate the function such that the school is merely supervising an outsourced process. The product is deliberately designed away from each of these. If a future configuration moves toward any of them, this position must be re-evaluated with counsel.

What this means for a pilot

The pilot statement of work must describe exactly what Eli does, what institution staff decide, what data is processed, and whether Eli performs an operational Title IV function. TPS classification and any required clauses or reporting are a pre-launch institution-and-counsel decision. Until that review is complete, Eli must not promise a categorical “not a TPS” posture.