Third-party vendors and universities offering online courses can breathe a little easier as the US Education Department has delayed regulations requiring colleges to disclose their relationships with such vendors. The decision followed an allegation by one of the largest providers of online education, 2U, that the department had overstepped its authority and broken procedural laws by expanding the definition of third-party servicers to include online program managers like 2U. While the department initially gave institutions until May to comply and then pushed the deadline to September, it has now deferred the deadline again while it reviews the concerns raised.

As online course managers have become a key element in higher education with more schools endeavouring to expand and enhance revenue, many colleges and vendors complained that the new definition of a third-party servicer was too broad and would be an untenable regulatory burden. Further confusion was created by the guidance’s ban on schools working with foreign contractors, which colleges felt could hinder study abroad programs. In response, Rep. Virginia Foxx, chair of the House Education Committee, strongly criticised the department’s handling of the policy change, which she claimed would lead to skyrocketing administrative costs and increased regulatory hurdles. Foxx is calling on the agency to abandon the guidance.

“We know that many institutions and companies have already begun to analyse their contracts in anticipation of reporting and compliance deadlines, and we understand the concerns that can cause,” wrote Education Undersecretary James Kvaal in a post on the department’s blog. “We are therefore providing additional time for institutions and companies to come into compliance with the guidance.” No exact date for implementation has been provided.

In the meantime, 2U has said that although it is pleased with the department’s decision to delay the regulation, the move doesn’t resolve its underlying concerns about the guidance. The company maintains that the expanded definition of a third-party servicer is out of line with the Higher Education Act, which assigns the classification to companies that process, disburse or deliver financial aid, and excludes online program managers. 2U has said it will proceed with the lawsuit but also continue to work with the department and other stakeholders on the issue.