What is a South Carolina Postsecondary School or Institution Bond?
Nonpublic Postsecondary Institutions licensed or is about to apply for a license in South Carolina are required to post a surety bond pursuant to Act No. 497, 1992 South Carolina General Assembly. The surety bond is with the South Carolina Commission on Higher Education and in an amount or penal sum as determined by the Commission as authorized by S. C. Code Ann., Section 59-58-80. The surety bond is conditioned upon the nonpublic postsecondary school as principal, its officers, agents, and employees meeting the terms and conditions of contracts for tuition and other contractual fees entered into between the bonded institution and all enrolled students. The bond runs continuously through additional terms until canceled by the surety through ninety days advance written notice to South Carolina Commission on Higher Education.
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Before a private institution can be licensed, the state requires that a surety bond is furnished by the institution. The surety bond ensures that the private institution, its officers, agents, and employees faithfully execute the terms and conditions of contracts for tuition and other instructional fees entered into between the institution and those enrolling as students.
The bond is written to the South Carolina Commission on Higher Education for the benefit of students who suffer financial losses of tuition and fees prepaid to a private educational institution. The losses must be as a result of the closing of the institution. The Commission may use the funds to pay refunds of unearned tuition and fees, to pay for or subsidize the cost of providing facilities and instruction for students to complete their programs, or to pay expenses to store and maintain records of these students.
The surety bond must issued by a company authorized to do business in the State such as Surety Bonds Direct. The minimum bond amount to be submitted with a renewal application will be based on the annual gross tuition income from licensed programs for the previous year. No additional programs may be offered without appropriate adjustment to the bond amount. The bond amount requirements are as follows based on previous year’s annual gross tuition income;
Tuition income of $0 - $100,000, minimum surety bond amount of $10,000
Tuition income of $101,000 - $200,000, surety bond amount of $20,000
Tuition income of $201,000 - $300,000, surety bond amount of $30,000
Tuition income of $301,000 and above, surety bond amount is equal to 10%, calculated at $100,000 increments
Out-of-state institutions licensed to offer their programs to residents of the State, gross tuition income means that income generated from students enrolled in the State of South Carolina. The bond for an out-of-state institution shall not be less than $20,000, unless otherwise specified by the Commission, but in no event shall be less than $10,000.
COMMISSION ON HIGHER EDUCATION Chapter 62 Regulations Governing Nonpublic Postsecondary Institutions
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