Third-Party Payments

Definition of a Third-Party Payment

A third-party sponsor is an entity that has agreed to pay all or a specified portion of a student or group of students' tuition, fees, books and other charges at an institution of higher education.

Third-party sponsors may include, but are not limited to, federal and state agencies, corporations, employers, school districts, trade unions, foundations, tribes, clubs, charitable organizations, and foreign governments. Institutions require a sponsor to provide an official document guaranteeing payment (i.e. letter, agreement, contract, certification, application, etc.).

Sponsors are typically invoiced directly for the charges they have agreed to pay, but institutions may also have sponsors that do not require an invoice.

The liability for payment of tuition and fees ultimately lies with the student if a sponsor fails to pay all amounts as agreed.

University services to the student may be restricted if financial obligations are not met.

Third-Party Payments Work Group

College and university student financial services staff are challenged to manage the idiosyncratic requirements of many third party entities in an efficient and cost-effective manner. In order to assist institutions NACUBO convened a work group in the fall of 2007, from across the country, to explore ways to facilitate the administration of third-party payments for student charges. Third-party payers may include federal and state agencies, employers, foundations, clubs, and other charitable organizations, and foreign governments. (Federal and state student financial aid is not included.)

The work group developed the above definition, and the contract and sample request for information insitutions can use to negotiate solutions with vendors. (See resources below.)

Survey

Currently, the work group is tackling the challenge of identifying useful metrics interested parties can use to better understand the marketplace and potentially develop a software solution. A survey is currently open and respondents are encouraged to answer questions to the best of their ability. The survey requests information about the volume, rate of increase, administrative burdent, process, and refunds processes for third-party paymenst. Results of the survey will be available through the NACUBO website.

The group is also reaching out to sponsors (foreign governments, 529 plan associations, etc.) to ensure that both sides of the issue are addressed.

NACUBO will continue to keep this page posted as progress is made.