PSI Drastically Reduces Third-Party Test Center Reimbursement, Survey Finds Students Suffer

In November 2022, the FAA knowledge test contractor, PSI, notified third-party test centers that fee reimbursements for FAA knowledge tests would be significantly cut in the new year. Since testing rate caps are set by contract (between PSI and the FAA), the change, which went into effect on Jan. 1, effectively reduced the already narrow profit margin for third-party testing centers by about 65 percent.

PSI oversees more than 750 testing centers, many of those are third-party FAA knowledge test providers maintained by educational institutions and small business. The contractor asserts that the changes are necessary due to increased costs associated with operational security and to ensure "all centers providing the same proctored testing services [are] treated equally and operate under a level playing field, which has not been the case to date.”

Given that third-party providers administer a significant majority of FAA knowledge tests, the new fee structure is expected to create substantial financial hardship and ultimately result in a stoppage of service at many third-party testing centers, especially those run by small businesses.

Concerned about the impact on knowledge test accessibility, a coalition of aviation organizations, including ATEC, asked for a delay to the fee structure change--PSI subsequently denied that request. In its response, PSI stated that the decision was made "only after extensive analysis to mitigate against any potential risks." While PSI recognized the change would drive some third-party test centers to discontinue offering testing services, it also claimed that the closures "would not have a material impact on either access or availability of testing to any individual."

After requests for a copy of the FAA-PSI contract and a singular list of all FAA knowledge testing centers (so industry can assess the impact the fee structure change has had on capacity) were also denied, ATEC went to its membership to gather its own data in support of future advocacy efforts.

Ninety-one of the 192 FAA-certificated aviation maintenance technician schools responded to the survey, which was sent to primary contacts on Feb. 2. Preliminary findings suggest:

• More than half of all A&P schools have an FAA knowledge testing center on their campus. Of those, nearly all of those (90%) are managed by the part 147 school as a third-party testing provider.
• Even given the change in reimbursement, only one respondent indicated its testing center would definitely close as a result of the fee change. Respondent comments suggest that despite operating at a loss, the testing center would continue operations as a vital service to its students.
• One third of respondents reported that PSI's change in testing fee reimbursement resulted in a reduction in testing capacity in their area, either through test center closures, reduced hours, or seat reductions. Programs also reported a reduction in area testing centers of around 10 percent, since Jan. 1.
• Fifteen percent of respondents stated that PSI's decision greatly impacted students' access to testing, 40 percent stated the decision somewhat impacted their student's access to testing.

If your program has not submitted a response (or you are not sure), you can submit a response here. The first question requests your A&P school name so that duplicates can be reconciled.

Stay tuned...