Yet another privately-funded school has closed unexpectedly, leaving students and their parents with little hope of recovering their full tuition costs. New Horizons Computer Learning Center in Peoria, Illinois closed suspiciously in January 2009. Furthermore, the school continued to cash tuition checks after it had closed its doors and vacated the premises. Since the institution’s closing, its owner Gabriel Jaja has apparently been eluding not only the media, but government officials as well.

Under Illinois state law, the school was required to secure a private school surety bond before opening to protect students from potential license violations or unexpected closures. The state will use the bond to compensate those who made claims against the institution for its untimely closure. Because the school failed to comply with regulations to register its students with the state, the Illinois State Board of Education gave former students until November 19th to make a claim that would enable them to recoup part of their lost tuition.

The federal government has no overarching surety bond requirements for private and vocational schools that operate in the U.S. Instead, government agencies at the state level may choose establish and enforce surety bond regulations for such institutions. However, some states have no private school surety bond regulations in place to protect the interests of the students—and the finances of the parents.

Even states that do enforce surety bond regulations for private schools have to work through issues if institutions break the bond’s contractual language. A private school surety bond is typically issued for amounts that are far too low to fully compensate all potentially harmed individuals who made tuition payments up-front. This means that if such an institution were to close suddenly—such as New Horizons—the surety bond would only allow students and their families to recover a limited amount of their financial losses.