A Guide to Private School Bonding
Generally private schools do not benefit from public funding because they are tuition-driven institutions that, in many cases, require a significant financial commitment from students and parents.
Private schools, like any other business, can suddenly shut down for a number of reasons, which can be devastating for parents and students who have already invested a significant amount of time and money.
What is a Private School Bond?
To help protect parents and students, most states require private schools to post a bond with the state Department of Education. Because private school tuition is often paid before classes even begin, these bonds guarantee that students and parents will receive at least some of their tuition money back in the event of a school closure.
Private schools across the country have closed because of poor fiscal management and malfeasance on the part of administrators, making these bonds increasingly important.
Businesses: The bond is usually a requirement for legal operation in the state. A school will not become licensed without it. Additionally, it makes businesses more reputable.
The public: Not only do private school bonds ensure students will be refunded in the unlikely event their school shuts down, this bond provides extra assurances to prospective students and parents who might have questions about the school’s financial standing.
Private School Bond Cost
Private school bond costs and requirements vary as the bond amounts and regulations surrounding each bond are established on a state level and the financial stability of the applicant. For example, in Alabama, a $20,000 surety bond is required. Schools will be required to pay a bond premium, which is usually anywhere from 1 to 4% of the total bond amount. That figure can change depending on the financial health of the applicant.
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.