Third-Party Servicer Use of Debit Cards to Deliver Title IV Funds

In response to Congressional requests and media reports about whether the terms and conditions of the debit cards that servicers use to deliver Title IV credit balances to students were in the best interest of students, we conducted a review that determined that FSA should take action to better ensure that student interests are served. Among our findings, we noted that (1) Schools that outsourced credit balance delivery gave servicers significant control over the Title IV funds delivery process and relied on them to comply with Title IV regulations but did not routinely monitor servicers’ Title IV compliance or their handling of student complaints; (2) Schools had financial incentives in their contracts with servicers that created the potential for conflicts of interest that could influence school officials’ decisions and actions at the expense of student interests; and (3) Schools provided, or servicers collected, student information that was not needed to deliver credit balances.