Colorado Amends Bond Requirement for Private Occupational Schools and Private Degree-granting Schools
As of August 8, the surety bond conditions for Colorado private occupational schools and private degree-granting schools have slightly changed. Senate Bill 18-177 which was passed and signed into law in May 2018 has added additional details regarding how bond compensation is used by the state Department of Higher Education, and specifically the Commission on Higher Education. The new law defines circumstances under which compensation can also be used by the Department to cover certain costs.
Read on for an overview of the new conditions for surety bonds for private educational facilities in Colorado.
Senate Bill 18-177 Amendments
SB 18-177 became effective on August 8, 2018. The bill introduces amendments to several articles and sections of Title 23 of the Colorado Revised Statutes (C.R.S). These amendments concern the surety bond requirements for private colleges and universities, as well as private occupational schools.
Previously, the amount backed by the surety under bond agreements for such facilities allowed for compensation to be used for tuition or fee reimbursement. It could also be used by the Colorado Commission on Higher Education, to the extent it is practicable, to provide alternate enrollment or train-out for students. So when a school ceases to operate, students that had paid fees would be compensated in one of these two ways.
All of the above remains the same under the new bond conditions. What has been added by SB 18-177 is that the Commission may also make a claim on the bond. According to the new law, once students’ claims have been covered, the Department may use the remaining funds for its own reimbursement. Such reimbursement would be required by the Department to cover administrative costs associated with the closure of the school in question.
Another small amendment introduced by the bill concerns the records of schools which have closed that are in danger of being destroyed or becoming unavailable to the Department. Previously such records needed to be kept in the Division of private occupational schools, whereas now they can be kept by the Commission at any location.
Implications of New Surety Bond Requirements for Private Schools
Luckily, the new surety bond conditions will not influence the cost of surety bonds for private schools in Colorado in any direct way. The bond amount required of such institutions will continue to be determined in accordance with 12-59-115(3) C.R.S. This amount is determined yearly for every school and must be based on “the amount of maximum prepaid tuition and fees collected and held at any one time during the calendar year.”
What the new conditions do mean for private schools though is that bond claims brought against them may result in higher compensation costs. Surety bond agreements always require bonded parties to repay the surety for any compensation it extends to claimants. If the Commission decides to use any remaining funds covered by the bond as reimbursement for administrative costs, this will raise the amount that schools need to repay to sureties.
In other words, though immediate bond costs for private schools will not increase in any way, costs associated with resolving claims will. This means that in order to avoid having to cover claims up to the full amount of a bond, private schools need to apply great scrutiny and diligence in maintaining operations.
Get a Free Quote on Your Bond
The cost of your surety bond is a fraction of the full amount of your bond and depends on your personal credit score. Depending on the amount of the bond you need to obtain, sureties may also review other indicators of your financial strength and stability.
Want to know how much you’ll need to pay to get a private school surety bond in Colorado? Complete our bond application form, and we will provide you with a free and 100% accurate quote! You can also call us at 877.514.5146 to speak to our bond professionals and learn more about the bonding requirements in Colorado.
Latest posts by Robin Kix (see all)
- Freight Broker Training - April 15, 2022
- Calling All Louisiana Dealers: Time to Renew Your Bonds - February 16, 2022
- Hurry Up, Nebraska Auto Dealer Bonds Expire in Less than Two Months - February 16, 2022