A Guide to Private School Bonding
Private schools educate millions of Americans of all ages. Some are vocational and technical schools that provide hands-on learning for students seeking a specific career path. Others offer a more holistic education for younger learners.
Generally, these schools don’t benefit from public funding. These are tuition-driven institutions that in many cases require a significant financial commitment from students and parents, often before classes actually begin.
But private schools, like any other business, can suddenly shutter for a host of reasons, which can be devastating for parents and students who have already invested time and money working toward graduation day.
State Specific Costs
Private school bond costs and requirements vary greatly as the bond amounts and regulations surrounding each bond are established on a state level. Select your state below for more information about private school bonds in your area or call 1 (800) 308-4358 to speak with a surety expert.
- New Jersey
- New Mexico
- North Carolina
Why Do Private Schools Need Surety Bonds?
To help protect parents and students, most states require private schools to post a bond with the state Department of Education. This surety bond provides students with an avenue of financial recourse if the school closes or gets shut down. Essentially, these bonds guarantee that students and parents will receive at least some of their tuition money back in the event of a school closure. The state and the surety issuer are there to compel payment or otherwise make sure that students receive compensation.
These bonds have becoming increasingly important as private schools across the country have closed because of poor fiscal management, malfeasance on the part of administrators or a host of other reasons. Private schools often seek tuition money up front, meaning parents and students can potentially lose out on thousands of dollars if a school closes suddenly.
How Much is a Private School Bond?
The amount of these bonds varies by state. For example, in Alabama it’s a $20,000 surety bond. Schools will be required to pay a bond premium, which is usually anywhere from 1 to 4% of the total amount. That figure can change depending on the financial health of the applicant. Surety underwriters will scrutinize an application before deciding whether to issue a bond.
Both the public and the business generally benefit. The bond is usually a requirement for legal operation in the state. It’s also a way for businesses to provide extra assurances to prospective students who might have questions about the school’s financial standing. For students, these bonds can help ensure that their hard-earned tuition money gets refunded in the unlikely event their school goes belly up or otherwise closes its doors.